Investing.com - The dollar rallied to seven-month highs against the other major currencies on Friday after a far stronger than expected U.S. jobs report reinforced expectations for a rate hike by the Federal Reserve next month.
The Labor Department reported that the U.S. economy added 271,000 jobs last month, well ahead of expectations of the 180,000 expected by economists and the largest increase since December.
The unemployment rate fell to a seven-and-a-half year low of 5.0%.
The robust data paved the way for the Fed to raise interest rates at its December meeting, a move that would make the dollar more attractive to yield-seeking investors.
Earlier in the week, Fed Chair Janet Yellen said that the U.S. economy was performing well, and that December would represent a “live possibility” for raising interest rates if upcoming economic data supported it.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.23% to 99.29 in late trade, the strongest level since April 15. The index ended the week with gains of 2.31%.
The dollar rose to two-and-a-half month highs against the yen, with USD/JPY up 1.16% to 123.15 late Friday, the most since August 21. The pair ended the week with gains of 2.2%, the strongest weekly performance since December.
USD/CHF rose to 1.0076, the most since March 17 and was last up 1.1% at 1.0063.
The euro fell to seven-month lows, with EUR/USD hitting a trough of 1.0708 before ending at 1.0740, off 1.31% for the day.
Sterling also fell to seven-month lows, with GBP/USD last down 1.01% at 1.5054.
The pound had already fallen more than 1% against the greenback on Thursday after the Bank of England cut its forecasts for growth and inflation in 2015 and 2016, signaling that rates are likely to remain on hold for an extended period.
In the week ahead, investors will be looking ahead to Friday’s U.S. data on retail sales, producer prices and consumer sentiment for fresh indications on the likelihood of a December rate hike.
Tuesday’s inflation figures from China will also be in focus, along with Friday’s preliminary data on economic growth in the euro area.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, November 9
The Eurogroup of euro zone finance ministers are to hold talks in Brussels.
Tuesday, November 10
Japan is to publish data on its current account.
Australia is to release a report on business confidence and data on home loans.
China is to produce data on inflation, with reports on both the consumer and producer price indices.
Later Tuesday, New Zealand’s central bank is to publish its bi-yearly financial stability report.
Wednesday, November 11
Australia is to release data on consumer sentiment.
China is to publish data on industrial production and fixed asset investment.
The U.K. is to publish the monthly employment report.
Meanwhile, Bank of England Governor Mark Carney is to hold a press conference about the quarterly inflation report.
Later in the day, European Central Bank President Mario Draghi is to speak at an event in London.
Thursday, November 12
Japan is to publish data on core machinery orders.
Australia is to release its monthly employment report.
Canada is to publish data on new house price inflation.
The U.S. is to publish data on initial jobless claims.
Friday, November 13
The euro zone and Germany are to publish preliminary data on third quarter economic growth.
Switzerland is to publish data on producer price inflation.
The U.S. is to round up the week with data on retail sales, producer prices, and a preliminary report on consumer sentiment.