* ECB keeps rates unchanged, but signals action in December
* U.S. GDP rises at record pace in Q3
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds new comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 29 (Reuters) - The euro dropped to a four-week low against the U.S. dollar on Thursday after the European Central Bank president flagged further monetary easing in December.
The dollar also climbed to a three-week high against the Swiss franc, and rallied from a five-week trough versus the yen.
Data showing record pace in U.S. economic growth for the third quarter, as well as an improving trend in jobless claims initially hurt the dollar as a safe haven, as the reports boosted risk appetite and lifted stocks.
But positive data should help the dollar in the long run, analysts said.
The market's focus though was on the ECB, as Europe grapples with the surge in COVID-19 cases that forced national lockdowns in Germany and France and a regional lockdown in Spain. ECB, which kept interest rates steady, committed on Thursday to contain the growing fallout from a second wave of coronavirus infections, saying it would hone its response by its December meeting.
"We agreed, all of us, that it was necessary to take action and therefore to recalibrate our instruments at our next Governing Council meeting," ECB President Christine Lagarde told a news conference. afternoon trading, the euro fell 0.6% to $1.1671 EUR=EBS , after earlier falling to a four-week low of $1.1650.
The euro also slid 0.3% versus the yen to 122.14 yen EURJPY=EBS .
"If you look at the price action in rate markets, we saw a further adjustment lower in some of the forward rate expectations. So the market is looking at the ECB comments as indicating further rate cuts," said Erik Nelson, currency strategist, at Wells Fargo (NYSE:WFC) in New York.
"You're also looking at an overall challenging backdrop in Europe, which means further shutdowns and more restrictions, more so than in the United States. So it's kind of a perfect storm that's weighing on the euro at this point," he added.
Rapidly rising COVID-19 infection rates in Europe, along with caution ahead of the U.S. elections, triggered the worst market selloff since June earlier this week. dollar index, with the euro as the largest component, rose to a four-week high and was last up 0.5% at 93.942 =USD .
Gross domestic product rebounded at a 33.1% annualized rate last quarter, according to an advance estimate on Thursday, the fastest pace since the government started keeping records in 1947. separate report showed 751,000 people filed for state unemployment benefits in the week ended Oct. 24, compared with 791,000 the previous period.
"Although the data ... appears healthy, it should be taken with a grain of salt," said Matthew Eidinger, market strategist, at Cambridge Global Payments. He cited the rise in U.S. COVID-19 cases that could mean more restrictions, which could derail the economy's recovery.
Against the yen, the dollar rose 0.4% to 104.67 yen JPY=EBS , rallying from a five-week low hit earlier in the session.
The dollar also rose 0.6% versus the Swiss franc to 0.9160 franc CHF=EBS , after earlier touching a three-week peak of 0.9172.
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Currency bid prices at 3:03PM (1903 GMT) Description
RIC
Last
U.S. Close Pct Change
YTD Pct
High Bid
Low Bid
Previous
Change
Session
Euro/Dollar
EUR=EBS
$1.1671
$1.1746
-0.64%
+4.10%
+1.1759
+1.1650 Dollar/Yen
JPY=D3
104.6700
104.3250
+0.34%
-3.62%
+104.7200 +104.0300 Euro/Yen
EURJPY=
122.15
122.52
-0.30%
+0.16%
+122.8700 +121.9000 Dollar/Swiss
CHF=EBS
0.9160
0.9104
+0.63%
-5.33%
+0.9172
+0.9089 Sterling/Dollar GBP=D3
1.2927
1.2979
-0.39%
-2.53%
+1.3025
+1.2882 Dollar/Canadian CAD=D3
1.3320
1.3322
-0.02%
+2.52%
+1.3389
+1.3279 Aussie/Dollar
AUD=D3
0.7029
0.7048
-0.28%
+0.16%
+0.7076
+0.7003 Euro/Swiss
EURCHF=
1.0691
1.0692
-0.01%
-1.48%
+1.0702
+1.0679 Euro/Sterling
EURGBP=
0.9026
0.9045
-0.21%
+6.77%
+0.9059
+0.9008 NZ
NZD=D3
0.6624
0.6637
-0.20%
-1.56%
+0.6659
+0.6597 Dollar/Dollar
Dollar/Norway
NOK=D3
9.5200
9.3640
+1.72%
+8.59%
+9.5925
+9.3345 Euro/Norway
EURNOK=
11.1126
11.0070
+0.96%
+12.96%
+11.2075
+10.9495 Dollar/Sweden
8.9291
8.8264
+0.26%
-4.48%
+8.9475
+8.8260 Euro/Sweden
EURSEK=
10.4211
10.3941
+0.26%
-0.46%
+10.4345
+10.3755