A look at the day ahead in U.S. and global markets from Mike

Dolan

Darkening skies over Europe's economy, trade and politics

sent the euro plummeting to its lowest in two years - just 3%

from dollar parity - as post-election U.S. crypto optimism sees

Bitcoin flirt with $100,000 for the first time.

Round figures often act like magnets for financial markets.

But what appears like a perfect storm over the euro zone -

and its biggest economy Germany in particular - has seen the

sharpest monthly move in the world's pivotal Transatlantic

exchange rate in two years.

Facing potential trade wars with both the United States and

China, a ratcheting up of geopolitical tensions to its East,

creeping energy prices and a German election early next year,

the euro's 4% fall so far in November is its biggest monthly

loss since April 2022 - the month after Russia invaded Ukraine.

With another set of dire business surveys showing German and

euro zone activity contracting this month, the euro plunged to

two-year lows of $1.033 on Friday. And pressure is mounting on

the European Central Bank to accelerate its easing just as the

Federal Reserve hesitates with further rate cuts stateside.

Money markets are now leaning towards a fourth ECB rate cut

of the year next month of as much as 50 basis points to 2.75%,

while futures still see little more than a 50% chance the Fed

will move at all next month.

At just shy of 230 basis points, the two-year U.S.-German

bond yield gap is at its widest since 2022 as well.

Alongside the latest gloomy business surveys, Russia's

increasingly pointed nuclear threats and extraordinary missile

strikes on Ukraine this week have jarred the continent anew as

Moscow eyes the isolationist stance of Donald Trump's incoming

U.S. administration as an opportunity to bolster its position.

And European wholesale gas prices hovered near annual highs

after fresh U.S. sanctions on Russia's Gazprombank raised fears

over what remains of gas supplies from Russia, just as cold

temperatures led to drawdowns in Europe's gas stores.

But the prospect of Trump catalyzing global trade wars in

which Europe would be left most exposed was perhaps the biggest

economic cloud gathering.

In the starkest warning so far from the ECB about the

consequences of a trade war, the central bank's chief economist

Philip Lane said on Thursday that global economic output would

suffer a "sizeable" loss, while any immediate boost to inflation

would fade over a few years.

The euro's losses, meantime, have catapulted the dollar

higher across the planet - with the dollar index also

hitting its best levels since 2022 and now up more than 6% for

the year to date. China's yuan briefly hit its weakest

since July.

With another set of hot U.S. labor market readings from the

weekly jobless claims series on Thursday, Treasury yields

held firm about 4.4%.

But with still no sign of Trump's pick for Treasury

Secretary, the rising dollar presents something of a headache

for a protectionist new administration. The latest reports

suggest former Fed governor Kevin Warsh is still favorite to get

the nod - until the Fed Chair Jerome Powell's position becomes

vacant at least.

Bitcoin touched a fresh record high of $99,380 on

Friday, with its sights set firmly on the $100,000 barrier, amid

hopes of a more friendly regulatory environment under Trump.

Trump embraced digital assets during his campaign, promising

to make the United States the "crypto capital of the planet" and

to accumulate a national stockpile of bitcoin.

And crypto investors see an end to increased scrutiny under

U.S. Securities and Exchange Commission Chair Gary Gensler, who

said on Thursday he would step down in January when Trump takes

office.

Overseas stock markets were mostly in the red on Friday,

with European stocks down and China's underperforming

with losses of more than 3%.

Elsewhere, Gautam Adani's Indian conglomerate could face a

funding squeeze after a U.S. arrest warrant for its billionaire

founder over an alleged $265 million bribery scheme, credit

analysts said, with some banks considering halting fresh credit

to the group.

Back on Wall Street, stocks bounced back on Thursday after

Nvidia's brief wobble when another set of stellar results

initially saw some profit-taking on its record gains.

Key developments that should provide more direction to U.S.

markets later on Friday:

* US flash business surveys for November from S&P Global and

final November household sentiment survey from University of

Michigan

* Federal Reserve Board Governor Michelle Bowman speaks;

European Central Bank board member Isabel Schnabel speaks; Swiss

National Bank Chair Martin Schlegel speaks

* US corporate earnings: Intuit

(Editing by Andrew Heavens)