Market News

By Brigid Riley

• Euro zone services activity contracted in November
• Euro briefly falls below $1.03
• U.S. dollar index hits fresh two-year peak
• Bitcoin touches record, not far off $100,000
• Sterling slips

TOKYO, Nov 22 (Reuters) - The euro plunged to a two-year low on Friday after data showed a tumble in euro zone business activity, and caused markets to up bets on ECB rate cuts, while bitcoin hit a record high just shy of $100,000.

The common currency dipped over 1% at one point to its lowest level since November 2022, and was last down 0.6% on the day at $1.0412 after the data, which showed the bloc's dominant services industry contracted and manufacturing had sunk deeper into recession.

Markets also raised their expectations of European Central Bank rate cuts, and see a more than 50% chance of a larger-than-usual 50 bp rate cut in December.
Francesco Pesole, currency strategist at ING, said in advance of the release that the PMI figures were "arguably the most important data input for the European Central Bank and the euro".
"The release has risen from being almost disregarded to a de-facto critical input for policy decision, given the Governing Council’s greater focus on forward-looking indicators of growth."

The euro also fell 0.44% against the Swiss franc . It weakened against the pound but then pared declines after soft British PMI data.

The euro has been weakening against the dollar since Donald Trump's victory in the U.S. presidential election. Recent escalations in fighting between Russia and Ukraine and political uncertainty in Germany, the bloc's biggest economy, have further weighed on the currency in recent weeks.

Britain's pound was also under pressure, down 0.5% at $1.257, after British retail sales fell by much more than expected in October, and PMI data showed British business output had shrunk for the first time in more than a year.