The dollar rounded off a bruising week firmly on the offensive, rallying against its major rivals Friday on the release of a surprisingly upbeat US employment report.
The dollar appreciated 1 percent against the euro, 1.5 percent against the Swiss franc, and posted solid gains against sterling and the yen after the latest non-farm business payrolls data showed that 57,000 workers joined the workforce last month. The unemployment rate remained static at 6.1 percent. Economists had expected a decline of 25,000 in payrolls and a spike up in the unemployment rate to 6.2 percent.
This arrested seven consecutive months of job losses, the cumulative effect of which on the dollar had been increasingly negative.
In addition, stocks jumped, bond yields soared, and gold prices plunged to one-month lows Friday.
"The market's going to want more evidence [of a labor market recovery], like a strong payrolls report next month," said Andreas Mann, senior dealer at Commerzbank in New York. He characterized the heavy buying of dollars as "a bit of profit-taking and stop-loss selling, but not enough to reverse the trend of the last few weeks."
But Larry Brickman, currency strategist at Bank of America in New York, said the jobs data could provide the dollar with more lasting support, Dow Jones reported.
"Perhaps the final leg of the recovery has actually reached us," he said.
He said the data may also turn the market's focus back to economic fundamentals, instead of the US current account deficit and global imbalances that were shoved into the forefront by the recent call by G7 finance ministers for more flexibility in currency policies.
"Maybe we can now move away from the G7 communique and back to economic fundamentals," he said.
In other markets Friday, spot gold slumped to a month low of US$367.75 a troy ounce, losing over 3 percent on the day. Treasurys sunk, which sent yields soaring. The yield on the 10-year Treasury note rallied more than 20 basis points to 4.2 percent.
Late Friday in New York, the euro was at US$1.1576, sharply weaker than US$1.1692 late Thursday in New York.
Against the Swiss franc, the dollar had jumped to Sf1.3385 from Sf1.3174 late Thursday. The British pound fell to US$1.6625 from US$1.6714 Thursday.
The dollar was also at ¥110.85, a slight change from ¥110.79 late Thursday in New York.
The dollar struggled to make much headway against the yen because of the hefty fall in euro/yen, which neared the end of New York trading more than one full yen lower at ¥128.32.
Also, large US investment banks were big sellers of dollars in the approach to and above ¥111.00, dealers said.
The euro had looked like consolidating around US$1.1600 in the hours preceding the payrolls data, but in early afternoon trading in New York, a Dutch bank sold over to slam it lower.
"We hit a lot of [sell] stops around US$1.1590," said a dealer at a UK bank in New York, anticipating a period of calm after this week's storms before the dollar comes under pressure again. "I think we'll have a bit of consolidation and then people will look to pick up euros for a move back up through US$1.17."
But Thomas Molloy, dealer at Bank Leumi in New York, reckons the euro won't be revisiting those three-month highs of US$1.1770 for a while. Perhaps reflecting the uncertainty injected into the market by the payrolls number, Molloy sees the euro/dollar trading in a lower range of US$1.14 to US$1.17 nest week.