Dollar edges up on US GDP beat as ECB holds and Lagarde sets exit date

The dollar edged higher after US third-quarter growth beat forecasts and core inflation ran hotter than expected. In Europe, the ECB held rates and announced that President Christine Lagarde will step down early next year.

What moved and why

Investing.com reports the dollar edged higher as strong US growth data offset Fed uncertainty. The data came in a single batch:

• GDP: The advance Q3 reading was 3.4% against a 3.2% estimate, with the prior quarter revised to 2.2% from 1.5%, according to investingLive. Real final sales were softer at 1.7% against 2.0% expected.
• PCE: September core PCE rose 0.5% on the month against 0.3% expected, investingLive reports. Headline PCE was 3.6% year on year, in line with forecasts. Personal spending rose 0.5% against 0.6% expected and income rose 0.2% against 0.3%.
• Jobless claims: Initial claims were 194K against 199K expected, and continuing claims fell to 1.701 million, per investingLive.

The reports were not fully aligned. Investing.com described US yields as steady with PCE landing in line, while investingLive highlighted the monthly core beat.

For reference, the ECB fixing of 29 October put EUR/USD at 1.1130, down 0.03% on the day and 0.67% below the 22 October fixing. You can follow the pair on this EUR/USD chart and the dollar index on this DXY chart.

Central banks in the news

ECB holds, Lagarde to leave

The ECB published its monetary policy decisions and a monetary policy statement from Lagarde and Vice-President Boris Vujčić. Investing.com reports the bank held rates. Ahead of the meeting, investingLive noted that eurozone inflation accelerated to 3.8% in September, driven by energy prices.

Separately, the ECB said Lagarde will step down on 7 February 2027.

Sterling at a 17-month high against the euro

Investing.com reports sterling hit a 17-month high against the euro as the ECB held. The 29 October fixing had GBP/USD at 1.3317, up 0.22% from 1.3288 the day before.

Fed hike bets and the loonie

investingLive writes that Fed rate hike bets survived Chair Kevin Warsh's press conference, leaving traders focused on the December meeting. In Canada, Investing.com says the Canadian dollar strengthened as traders assessed the Bank of Canada hike. USD/CAD fixed at 1.3996, down 0.36%. Our sister site explains the mechanics in a primer on interest-rate differentials after the BoC hike.

Risk backdrop

According to investingLive, citing Semafor, the Trump administration is in talks on a temporary peace deal with Iran, with Vice President JD Vance sending a letter to Tehran. investingLive's European wrap said crude was capped by the renewed deal hopes, and US futures fell as Alphabet's earnings revived AI spending fears. Its Asia-Pacific wrap said Alphabet slid over 9% after hours.

Among other fixings, USD/MXN rose 0.62% to 18.747 and NZD/USD stood at 0.5616, down 1.13% over five fixings.

What to watch next

1. RBA: investingLive says the RBA is set for a fifth 2026 hike to 4.85%, with banks flagging the risk of another move in February. AUD/USD fixed at 0.7025.
2. Amazon earnings: investingLive flags Amazon as next after Alphabet's slide.
3. US-Iran talks: any progress or breakdown in the Semafor-reported negotiations, and the effect on oil.
4. Fed December meeting: how traders reprice hike bets after the hot core PCE reading.
5. ECB succession: the search for Lagarde's successor ahead of her 7 February 2027 exit.