Investing.com - The dollar rose to fresh seven-year peaks against the yen on Friday after data showing that the U.S. economy added jobs at the fastest rate in nearly three years last month underlined the diverging monetary policy stance between the Federal Reserve and the Bank of Japan.
The U.S. economy added 321,000 jobs in November the Department of Labor said, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.
September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.
USD/JPY hit peaks of 121.69, the most since July 2007 and was at 121.43 in late trade, 1.38% higher for the day. For the week, the pair jumped 2.17%.
The particularly strong jobs report prompted markets to bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 ahead of the data. In contrast, the BoJ unexpectedly expanded its stimulus program in late October.
The yen remained weaker after Japanese media outlets reported Thursday that Prime Minister Shinzo Abe's coalition government could retain its majority in the lower house of parliament in elections due to be held on December 14.
Abe dissolved parliament last month, clearing the way for elections to seek a fresh mandate for his economic policies, which call for a weaker yen. The decision came after
Japan’s economy unexpectedly fell into recession in the third quarter.
The euro rose to six-year highs against the yen on Friday, with EUR/JPY at 149.23 in late trade.
The single currency was boosted after European Central Bank President Mario Draghi said Thursday that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.
Meanwhile, the U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.
In the week ahead investors will be awaiting Thursday’s U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery. Japan is to publish revised data on third quarter economic growth on Monday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday as there are no relevant events on this day.
Monday, December 8
Japan is to release final data on third quarter gross domestic product and a report on the current account.
Wednesday, December 10
Japan is to report on its BSI manufacturing index.
Thursday, December 11
Japan is to release data on core machinery orders and tertiary industry activity.
The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.
Friday, December 12
The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.