The U.S. currency rallied against most of its major peers as the three-month gain jobs was the biggest in 17 years. Signs of accelerating economic growth led futures markets to price in an earlier Fed borrowing-cost increase, while policy makers in Europe and Japan carry out unprecedented monetary stimulus to boost flagging growth and inflation.
“It’s a massive number,” Matt Derr, a foreign-exchange strategist in New York at Credit Suisse Group AG, said by e- mail. “It should start to remove some doubt that the U.S. can tighten in mid-2015.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, added 0.8% to 1,164.67 as of 10:03 a.m. in New York. That’s close to the highest in data going back to 2004.
U.S. employers hired 257,000 workers in January, compared with the median estimate of 228,000 in a Bloomberg News survey of economists. The increase followed a 329,000 gain in December that was bigger than previously reported.
Average hourly earnings jumped 0.5%, the most since November 2008, from the prior month. They were up 2.2% during the past year, the biggest increase since August.
The data are “extremely strong, particularly setting to rest the fears from the weak December earning growth, as it was revised higher -- we saw a strong beat there, and a massive upward revision to December payrolls,” John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark, said by e-mail.
The jobless rate rose to 5.7% as the improving job market lured more people into the labor force.
The dollar has gained about 14% against the euro in the past six months as the European Central Bank loosened monetary policy to combat growing risks of deflation and a slowing economy. The greenback is up 14% versus the yen, when the central bank buys bonds each month.
The Fed maintained its pledge to be “patient” on the pace of future interest rates increases while boosting its assessment of the economy and labor market at its Jan. 28 meeting. The central bank has held rates at virtually zero since December 2008 to support the economy.
Federal fund futures traded on the CME Group Inc. exchange give a 26% chance the central bank will lift rates at their policy meeting in June, according to Bloomberg data. That’s up from 17.6% Thursday.
“If these gains are maintained moving forward, a June rate hike from the Federal Reserve is absolutely on the table and may even be the preferred scenario if inflation shows signs of ticking higher,” Matt Weller, an analyst at Gain Capital Holdings Inc. in Grand Rapids, Michigan, said in a note.