The dollar gained ground against the euro and sterling on Friday, boosted by strong US economic activity data, while Bitcoin continued its impressive advance towards $100,000, reaching a new all-time high.
Fall of the euro and the pound sterling
- Eurozone: The HCOB Composite Purchasing Managers’ Index (PMI) fell to 48.1 in November, a 10-month low, signaling economic contraction. This reflects a slowdown in business activity, with the data below the 50 level.
- United Kingdom: The PMI fell to 49.9, the first decline in more than a year, affected by a corporate tax increase that weighs on private sector activity.
- Impact on the euro and the pound: The euro fell 0.54% to $1.0416, hitting a two-year low of $1.0333. The British pound lost 0.49% to $1.2528, recording its second consecutive week of losses.
US leads with strong economic data
In contrast, the US presented an optimistic outlook with a composite PMI that rose to 55.3, the highest level since April 2022. This increase was mainly driven by the services sector, highlighting the country’s economic resilience.
The dollar index, which measures the dollar’s strength against a basket of currencies, rose 0.41% to 107.50, marking its third consecutive week of gains. Against the Japanese yen, the dollar strengthened by 0.12% to 154.69.
Evolution of the dollar index in the last month. Source: Google Finance
Bitcoin: close to $100,000
Bitcoin continued its impressive rally, rising 1.44% to trade at $98,496 after hitting a record high of $99,697. Since the US election, the Cryptocurrency has risen more than 40%, driven by expectations that Donald Trump’s administration will ease the regulatory environment for cryptocurrencies.
Monetary policy expectations
- Federal Reserve: Investors are reassessing the odds of a rate cut in December, which now stand at 52.7%, up from 69.5% last month, according to the CME FedWatch Tool.
- Europe and the United Kingdom: The European Central Bank and the Bank of England are preparing to pursue more aggressive rate cuts to stimulate their economies.
Japan: inflation and Central Bank policies
In Japan, annual core inflation was 2.3% in October, which could lead the Bank of Japan to raise its interest rates in December, according to a Reuters poll. The weakness of the yen, which fell below 156 to the dollar last week, adds pressure for authorities to intervene.
Conclusion
The global economic outlook reflects a stark contrast between the strength of the United States and the difficulties of Europe and Japan. Meanwhile, Bitcoin continues to establish itself as an attractive asset in an environment of uncertainty, rapidly approaching the symbolic $100,000 mark.
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