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FILE PHOTO: U.S. dollar and Euro notes are seen in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/File Photo

VOInews, Tokyo : 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 per cent at one point to its lowest level since November 2022, and was last down 0.6 per cent 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 per cent 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 per cent 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 per cent 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.

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 per cent 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//CNA-VOI