Investing.com - The dollar rose to its highest level in 13 years against the yen on Friday and gained ground against the euro after a stronger-than-expected U.S. employment report boosted the outlook for higher interest rates.
The Labor Department reported that the U.S. economy added 280,000 jobs in May, ahead of economists forecast for 220,000. The unemployment rate ticked up to 5.5% from 5.4% in the previous month.
April’s payrolls report was revised to show that 221,000 jobs were created.
Hourly earnings increased 0.3% in May, after a 0.2% increase in April.
The upbeat data, particularly the pick-up in wage growth underlined the view that the economy is on track to rebound after a weak first quarter and bolstered expectations that the Federal Reserve could start to hike interest rates at its September policy meeting.
The dollar rallied against the other major currencies following the release of the data.
USD/JPY hit highs of 125.85, the most since June 2002 and was at 125.58 in late trade, 0.99% higher for the day. The pair ended the week with gains of 1.08%.
EUR/USD fell to lows of 1.1050 before pulling back to 1.1113 in late trade, still down 1.11% for the day.
USD/CHF was last up 0.61% at 0.9389 while GBP/USD was down 0.61% to 1.5271.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.93% to 96.38 late Friday.
Meanwhile, the Canadian dollar jumped higher against the greenback on Friday, boosted by a robust domestic jobs report.
Statistics Canada reported that the economy added 58,900 jobs in May, far more than forecasts for jobs growth of 10,000. The unemployment rate remained unchanged at 6.8%, in line with forecasts.
USD/CAD fell to lows of 1.2428 and settled at 1.2438, down 0.51% for the day.
In the week ahead, investors will be focusing on revised data on first quarter growth from Japan and the euro zone, while reports on euro zone industrial production will also be closely watched.
In the U.S., Thursdays retail sales report and Fridays report on consumer sentiment will be scrutinized for signs that the world’s largest economy is gaining momentum in the current quarter.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 8
Japan is to release revised data on first quarter economic growth.
In the euro zone, Germany is to release data on industrial production.
Canada is to publish reports on building permits.
Tuesday, June 9
Australia is to release official data on home loans and a private sector report on business confidence.
China is to release data on consumer and producer price inflation.
The euro zone is to release revised data on first quarter economic growth.
Switzerland is to produce data on consumer inflation.
The U.K. is to report on the trade balance.
Wednesday, June 10
Japan is to publish data on core machinery orders.
Australia is to publish private sector data on consumer sentiment.
Reserve Bank of Australia Governor Glenn Stevens is to speak; his comments will be closely watched.
The U.K. is to release data on manufacturing production.
Later in the day, Bank of England Governor Mark Carney is to speak at an event in London.
Thursday, June 11
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Australia is to publish its monthly employment report.
China is to publish data on industrial production and fixed asset investment.
The U.S. is to release reports on initial jobless claims and retail sales.
Bank of Canada Governor Stephen Poloz is to speak at an event in Ottawa.
Friday, June 12
The U.S. is to round up the week with data on producer price inflation and consumer sentiment.