The dollar surged on Friday after the April jobs report signalled the US labour market was stronger than anticipated. The creation of 274,000 new jobs in April, well above market expectations and coupled with upward revisions to the previous two months' numbers, suggests the US economic "soft patch" might not be as soft as originally thought. This in turn could stoke expectations of more Federal Reserve interest rate hikes, which are broadly dollar supportive, as rising yields attract foreign investors. "It was a blockbuster report," said Michael Woolfolk, senior currency strategist at Bank of New York in New York. "To all intents and purposes, this takes the 'soft patch' off the table as far as the Fed and monetary policy is concerned."
The euro tumbled to around $1.2818 in late New York trading, sharply down from about $1.2945 shortly before the data and late Thursday.
The euro weakened against other currencies, falling to new three-month lows against the yen at around 134.36 yen. Late in the day, it was still sharply down at 134.60 yen.
The dollar was up around 0.5 percent at 104.98 yen, and up more 1 percent at 1.2068 Swiss francs.
Sterling was 0.7 percent weaker at $1.8904.
"There's no doubt (the US jobs data) was a strong report, any which way you cut it. It's robust across the board," said Peter Frank, senior currency strategist with ABN Amro in Chicago.
"This report suggests trend growth. It was good because there were upward revisions, which I think is quite important. There were no anomalies here, which is positive for the dollar because it suggests the Fed can tighten on the path it was going to tighten anyway," Frank said.
"It's positive for the dollar, and it offsets several weeks of negative data," Frank added.
Non-farm payrolls rose by 274,000 in April, easily beating economists' forecasts of a 170,000 rise. The jobless rate was 5.2 percent, matching forecasts.
But the dollar could be hurt when the US trade balance for March is released on Wednesday, some said.
"That will temper the dollar's rise against most major currencies," said Andrew Busch, global foreign exchange strategist with Harris Nesbitt in Chicago.
Next week, "we will have a lot of talk about twin deficits and the negative connotation for US financial markets. That will be without question the next focus," Busch said.
Earlier on Friday, the dollar firmed after China said that pressure for a revaluation of the yuan was not that great.
Sterling came under selling pressure after data showed a slowing property market and as British Prime Minister Tony Blair secured a third straight term, but with a much slimmer majority.
Analysts say that if the yuan, which has been pegged against the dollar for about a decade, were allowed to trade more flexibly, that would spark a broad rally in Asian currencies and put the dollar under pressure.
For currency investors, buying Japanese yen is a popular proxy bet on a near-term move by China.
If China's yuan rose against the dollar, that would allow other Asian central banks to relax efforts to artificially weaken their currencies against the dollar and still keep their exports competitive with China's. Chinese Vice Finance Minister Li Yong said on Friday he did not think upward pressure on the yuan was so great, but urged currency speculators to be patient over yuan reform.
Treasury Secretary John Snow on Friday reiterated the US position that China's financial structures are strong enough to allow the yuan to float now.
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