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.

DOLLAR STRONG ON INFLATION PROSPECTS UNDER TRUMP

Further signs of slowing economic growth could cause the Bank of England to soften its monetary stance.

The index that tracks the dollar against six main peers was up 0.43% at 107.5, its highest since November 2022.

The index has appreciated sharply this month on expectations that President-elect Donald Trump's policies could reignite inflation and limit the Fed's ability to cut rates, keeping other currencies under pressure.

Trump floated the idea of appointing Kevin Warsh as Treasury Secretary on the understanding that he could later be Federal Reserve chairman, the Wall Street Journal

reported

on Thursday, citing people familiar with the matter.

The Japanese yen was at 154.4 per dollar, flat on the day. The yen slid back below 156 per dollar last week for the first time since July, sparking the possibility that Japanese authorities may again take steps to shore it up.

The yen received a short-lived boost from BOJ Governor Kazuo Ueda, who said on Thursday that the bank would "seriously" take into account the impact that yen moves could have on the economic and price outlook.

Japan's annual core inflation was 2.3% in October, keeping pressure on the central bank to raise its still-low interest rates.

Just over half of economists in a Reuters poll believed the BOJ will hike in December, in part because of concerns about the depreciating yen.

"The renewed strengthening of underlying inflation coupled with the recent rebound in consumer spending and the renewed weakening of the yen strengthen the case for another BOJ rate hike next month," Marcel Thieliant, head of Asia-Pacific at Capital Economics, wrote in a research note.

Eyes were also on bitcoin, which was at a record high, a whisker off $100,000.

(Reporting by Brigid Riley in Tokyo and Alun John in London; Editing by Stephen Coates and Kim Coghill)