The U.S. dollar climbed higher on Friday, while the euro fell to a two-year low after the release of business activity data for the U.S. and Europe. Meanwhile, Bitcoin reached a new record high as it approached the $100,000 mark.
In the eurozone, the HCOB composite Purchasing Managers’ Index (PMI) dropped to 48.1 in November, its lowest in ten months. This reading, compiled by S&P Global, indicates contraction in business activity, falling below the 50-point threshold that separates expansion from contraction. Similarly, in the UK, PMI slipped to 49.9, marking the first contraction in over a year, as higher taxes on businesses weighed on economic activity.
In contrast, U.S. business activity continued to show strength. S&P Global reported an increase in its composite PMI to 55.3 in November, the highest since April 2022, driven largely by the services sector. This divergence highlights the growing gap between the U.S. and other major economies, with the U.S. economy displaying resilience even as manufacturing remains sluggish.
The dollar index, which measures the greenback against a basket of major currencies, rose to 107.50. The euro dropped 0.54%, trading at $1.0416 after briefly hitting $1.0333, its weakest level since late 2022. Sterling also weakened, falling 0.49% to $1.2528, marking its second consecutive week of decline.
Bitcoin continued its upward trajectory, surging over 40% since the U.S. election amid optimism that the incoming administration may adopt a more lenient regulatory stance on cryptocurrencies. The cryptocurrency reached a high of $99,697 before settling at $98,496.
Interest rate expectations are also shifting. The likelihood of a Federal Reserve rate cut at its December meeting has decreased, with markets now pricing in a 52.7% chance of a 25 basis point reduction, down from nearly 70% a month ago. Meanwhile, central banks in Europe and the UK are expected to adopt more aggressive rate cuts to support their slowing economies.
The Japanese yen remained under pressure, with the dollar trading at 154.69 yen. Despite a slight recovery, the yen’s recent weakness has raised concerns about potential intervention by Japanese authorities. Japan’s core inflation rate held steady at 2.3% in October, fueling speculation that the Bank of Japan may raise interest rates in December.
As global markets adjust to differing economic conditions and monetary policy paths, the dollar’s strength underscores the U.S.’s relative economic stability, even as uncertainties persist in Europe, the UK, and Japan.
