The dollar rose to the highest since August against the Japanese yen and gained versus other major currencies on Friday after the Labor Department said the U.S. economy added 162,000 jobs in March, the most in three years.
"People are buying the V-shaped recovery story," said T.J. Marta, chief market strategist at Marta on the Markets. "The markets are celebrating that."
The euro (CUR_EURUSD) fell to $1.3488 from $1.3584 in late North American trading on Thursday.
The dollar index (DXY), which measures the greenback against a basket of six major currencies, rose for the first time in three days to 81.256, from 80.719 late Thursday.
The dollar bought 94.70 Japanese yen (CUR_USDYEN), up from 93.87 yen Thursday. It hasn't closed above 94 yen since August 2009.
The British pound (CUR_GBPUSD) slipped to $1.5203, from $1.5288.
Most of European markets and some Asian markets were closed for Good Friday, as are U.S. equity and commodity markets. The U.S. bond market is expected to close at noon Eastern.
Economists polled by MarketWatch expect a gain of 200,000, but that included predictions of more hiring for the U.S. Census than materialized. Private sector job creation topped expectations, indicating more strength in the U.S. economy, supporting the dollar.
The unemployment rate remained at 9.7%. On Wednesday, a report from ADP indicated private-sector hiring would be weaker.
"This didn't disappoint as much as ADP would have suggested," Marta said. "That gave an overall upside tone to the market."
On Thursday, the dollar fell against the euro but rose to a seven-month high versus the Japanese yen on bullish data on the employment and manufacturing fronts.
Also aiding the dollar, the Federal Reserve may again increase the discount rate at its meeting on Monday, further widening the gap to the more closely-watched fed funds rate, analysts said Friday.
The Board of Governors will meet on Monday to consider the discount rate, now at 0.75%, to be changed by Fed banks to institutions seeking emergency funds, the Fed said in a release.
The discount window is rarely used now, so has little impact on the economy and a sign of normalizing financial markets, since the discount rate used to be 1% above the fed funds rate. It is now 0.5 percentage points. When the central bank last raised the discount rate, it said it is not an indication of monetary policy.
Japan, China
In Asian news, Japan's finance minister said Friday that he will not pressure China over its foreign-exchange policy when he visits Beijing over the weekend, according to reports.
"I'm fully aware that this issue is very important," Finance Minister Naoto Kan was quoted as saying by the Kyodo news service. "But I believe it would not necessarily be good to be thought of as putting pressure" on China's government to allow its currency to appreciate.
Copyright 2009 Dow Jones Newswires
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