Euro steady against dollar after ECB leaves rates unchanged

NEW YORK/LONDON, Oct 29 : The euro was steady on Thursday after the European Central Bank kept interest rates unchanged, while the dollar was flat against other major currencies in the wake of data showing rising US inflation.

The ECB left interest rates unchanged in a well-telegraphed move but warned that inflation risks were on the rise from surging energy costs. The central bank also announced the early departure of President Christine Lagarde, who has resigned and will step down on February 7, ahead of the end of her tenure in October 2027.

The euro fell to its lowest since May but was last up 0.07 per cent on the day at around $1.1158.

"As expected, the ECB leaves rates unchanged at today’s meeting, but signals that a rate hike in December is firmly in play, citing upside risks to the inflation outlook," said Marchel Alexandrovich, European economist at Saltmarsh Economics.

"The bigger news is the confirmation that Christine Lagarde will leave her post in February, rather than in October of next year. Markets will not be surprised by the announcement, but it will bring into focus the fact that the ECB is heading for a significant reshuffle in the first half of 2027, with Isabel Schnabel, Lagarde, and Philip Lane — the ECB’s de facto chief economist — all set to depart imminently."

US Commerce Department data showed that inflation accelerated in September as consumers paid more for gasoline and other goods, supporting economists' expectations of an interest rate increase from the Federal Reserve in December. The US economy, however, grew faster than expected in the third quarter, helped by resilient consumer spending and AI-driven business investment, data also showed.

The Fed had opted to delay any changes to borrowing costs until after next week's midterm election.

The dollar has not reacted significantly to the latest economic events largely because much of it had come as expected and already been priced in, said Eugene Epstein, head of structured products for Moneycorp North America.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.08 per cent to 102.05.