NEW YORK: The US dollar advanced against major currencies on Friday after data showed US jobs growth rose solidly and wages rebounded strongly in January, bolstering views that the Federal Reserve will hike interest rates by mid-year.
The US Labor Department said nonfarm payrolls increased by 257,000 last month, beating economists' expectations for a rise of 234,000 jobs according to a Reuters poll, while data for November and December was revised to show a whopping 147,000 more jobs created than previously reported.
In addition, wages increased 12 cents last month after falling five cents in December.
That took the year-on-year gain to 2.2 percent, the largest since August, raising expectations the Fed may have less leeway in citing low inflation as a reason to hold off on hiking rates sooner. The dollar recovered Thursday's losses against the euro and hit its highest level against the safe-haven Japanese yen in three and a half weeks, at 118.995 yen.
The greenback also rebounded against the Swiss franc after earlier hitting one-week lows.
"The data is saying the Fed should hike in mid-2015," said Alfonso Esparza, senior currency Strategist at Oanda in Toronto. "The growth in wages could ease some of the concerns that low inflation could delay the rate hike."
Traders are eyeing the Fed closely for when the US central bank will hike benchmark borrowing rates from rock-bottom levels, a move expected to boost the dollar by driving investment flows into the United States.
The dollar's sharp move higher against the yen showed greater risk appetite among traders in response to the strong US data.
"If we continue to see an improvement in data like we saw this morning, dollar/ yen will head higher," said Sireen Harajli, a foreign exchange strategist at Mizuho Corporate Bank in New York. She said she expected the dollar to hit 124 yen within the next few months.
The euro was last down 1.31 percent against the dollar at $1.13275.
The dollar was last up 1.22 percent against the yen at 118.96 yen.
The dollar was last up 0.73 percent against the franc at 0.92805 franc.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 1.1 percent at 94.589.
On Wall Street, the benchmark S&P 500 stock index was last up 0.33 percent.
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