Early trade in New York: Dollar hits 13-year peak versus yen; climbs versus euro

The US dollar rallied to a 13-year peak against the yen and rose sharply against the euro on Friday after data showing US job growth accelerated in May, bolstering the case for an interest rate hike as early as September. Nonfarm payrolls increased 280,000 last month, the largest gain since December, the Labor Department said. Economists polled by Reuters had forecast payrolls rising 225,000 last month.
While the unemployment rate rose to 5.5 percent from a near seven-year low of 5.4 percent in April, that was because more people entered the labor force. The increase in average hourly earnings took the year-on-year gain to 2.3 percent, the largest rise since August 2013. The wage growth indicated that US inflation was moving closer to the Fed's 2 percent target, analysts said.
After the release of the data, interest rate futures traders bet on a 52 percent of a rate hike in October. But some currency market players thought the figures increased the likelihood of a Fed hike in September. "The market isn't pricing a high enough probability of September," said Aroop Chatterjee, currency strategist at Barclays in New York.
The euro was last down 1.25 percent against the dollar at $1.10985 after hitting a more than two-week high of $1.138000 on Thursday. The dollar was last up 1.02 percent against the yen at 125.635 yen. The dollar was last up 1.3 percent against the franc at 0.94575 franc. The dollar index, which measures the greenback against a basket of six major currencies, was up 1.14 percent at 96.557.