The dollar shoots up after "monstrous" US employment report

The dollar rallied on Friday after data showed US employers added far more jobs in January than economists expected, which could give the Federal Reserve more leeway to keep raising interest rates.

The Labor Department’s employment report showed nonfarm payrolls increased by 517,000 jobs last month. Data for December was revised up to reflect 260,000 jobs added, instead of the 223,000 previously reported.

Average hourly earnings rose 0.3%, after rising 0.4% in December. This reduced the year-on-year increase in wages to 4.4% from 4.8% in December. The economists consulted by Reuters they expected an increase of 185,000 jobs and a year-on-year increase in wages of 4.3%.

That’s a “monstrous number,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The dollar rose 1.12% to 102.92 on the day against a basket of currencies, the highest level since January 12 and its best day since September 23.

The euro fell 0.98% to $1.08040. The dollar gained 1.82% against the Japanese yen to 131.20 units, the highest since January 18 and its best session since June 17.

Sterling fell 1.39% to $1.20550, its lowest level since January 6.

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