The dollar strengthened while the euro dropped to a two-year low on Friday, driven by economic data showing contrasting regional trends.
Bitcoin continued its upward climb toward $100,000, maintaining the cryptocurrency’s bullish momentum.
In the eurozone, HCOB’s preliminary composite PMI, compiled by S&P Global, fell to 48.1 in November.
This 10-month low indicates contraction, as the reading is below the 50-point threshold that separates growth from decline. It also missed the 50.0 estimate.
In the UK, Britain’s PMI declined to 49.9 in November from 51.8 in October, signaling the first contraction in private sector activity in over a year.
Analysts pointed to proposed tax increases on businesses as a contributing factor, adding to signs that the economy is losing steam.
The U.S. offered a brighter contrast. S&P Global’s flash U.S. Composite PMI rose to 55.3 in November, its highest since April 2022, driven by strength in the services sector.
“It highlights the two-track world. It’s U.S. versus the rest, but even within the U.S. it’s services versus manufacturing,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“How long can U.S. services make up for the drag from everything else?”
The dollar index, which measures the currency against a basket of others, gained 0.5% to reach 107.53.
The euro fell 0.56% to $1.0414 after touching $1.0333, its lowest point since November 2022.
The greenback is on track for its third consecutive weekly rise, while the pound slid 0.5% to $1.2522, marking its second straight weekly decline.
Bitcoin’s rally persisted, edging up 0.35% to $98,428.
The cryptocurrency has surged more than 40% since the U.S. election, fueled by expectations that President-elect Donald Trump will pursue a regulatory environment friendlier to digital assets.
Investors are recalibrating their expectations for the Federal Reserve’s rate decisions.
CME’s FedWatch Tool now shows a 56.2% chance of a 25-basis-point rate cut at December’s meeting, down from 69.5% a month ago.
In contrast, the European Central Bank and Bank of England are seen as more likely to cut rates aggressively to shore up their economies.
Against the yen, the dollar rose 0.15% to 154.74. The yen briefly dipped below 156 per dollar last week, the first time since July, sparking speculation that Japanese authorities might intervene to stabilize the currency.
Japan’s core inflation held steady at 2.3% in October, adding pressure on the Bank of Japan to consider raising its historically low interest rates.
As businesses navigate these uncertain economic waters, contrasting policies and economic performances across regions underscore the challenge of managing growth in a fragmented global economy.
Central banks and policymakers will remain in the spotlight as they attempt to guide their nations through these complexities.
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