NEW YORK: The dollar jumped on Thursday after data pointed to a strong jobs market a day before Friday’s highly anticipated employment report for December, supporting the prospect that the Federal Reserve could keep hiking rates at an aggressive pace.

Private employment increased by 235,000 jobs last month, the ADP National Employment report showed on Thursday. Economists polled by Reuters had forecast private jobs increasing 150,000.

Separately, the number of Americans filing new claims for unemployment benefits dropped to a three-month low last week, while layoffs fell 43% in December.

“The payrolls and the wage data is very key for the Fed’s stance,” said Lou Brien, a market strategist at DRW Trading in Chicago, though he noted that Fed moves were not contingent on one piece of data, with each release representing more “tiles in the mosaic”.

Friday’s government jobs and wage data for December is this week’s major economic focus as investors gauge how high the US central bank is likely to raise rates, and for how long.

It is expected to show that employers added 200,000 jobs in the month, while average hourly earnings are predicted to have risen 0.4% in December for an annual increase of 5%.

Consumer price data for December, due on Jan. 12, is expected to show that prices gained by 0.1% in December.

Fed funds futures traders increased their bets on Thursday that the Fed could hike rates by 50 basis points at its meeting concluding on February 1. It is now seen as a 48% chance, up from 31% on Wednesday morning, with a 25 basis points increase sill seen as marginally more likely.

Brien said that it would likely take “something extraordinary” in terms of much higher than expected inflation or wage gains for the Fed to raise rates by 50 basis points next month, with Fed officials now preferring to move in more gradual 25 basis point increments as they evaluate the impact of higher rates.