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Euro zone services activity contracted in November

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Euro briefly falls below $1.03

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U.S. dollar index hits fresh two-year peak

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Bitcoin touches record, not far off $100,000

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Sterling slips

(Updates prices at 0940 GMT)

By Brigid Riley

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.

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.