Dollar shines after blockbuster US jobs report

The dollar gained on Friday after five straight days of losses, lifted by data showing the US economy created many more jobs than expected in November, backing the Federal Reserve's stance of keeping interest rates on hold after cutting them three times this year.

Gains in the dollar were fairly modest despite the robust jobs number, however. The greenback has been pummeled all week due to a slew of weaker-than-expected data in the US manufacturing and services sectors, with investors coming to grips with the reality that the economy is slowing down.

Friday's jobs report provided a respite from all the pessimism and from the continuing uncertainty over the status of US-China trade negotiations.

Data showed nonfarm payrolls increased by 266,000 jobs last month, with manufacturing recouping all 43,000 positions lost in October. Economists polled by Reuters had forecast payrolls rising by 180,000 jobs.

The dollar still posted its worst weekly percentage loss in more than a month despite Friday's gains.

"No question today's jobs report is strong, but is it strong enough for people to change their views about the economy?" said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

"I still think the US economy is weakening and I don't think today's number is going to change people's expectations for Q4 GDP (gross domestic product)," he added.

The New York Fed Staff Nowcast estimate for GDP in the fourth quarter stands at 0.6% and 0.7% in the first quarter next

year, according to the NY Fed website. Poor US data releases earlier reduced the GDP estimate by 0.2 percentage point for Q4 and lowered the expectation for Q1 next year by 0.3 percentage point.

Earlier in the week, US data showed dismal figures on private payrolls, services, manufacturing, and construction spending.

The jobs report reinforces expectations that the Fed will remain on hold at next week's policy meeting, with its outlook on monetary policy seen little changed from the last statement.

"We suspect the large majority of the (Federal Open Market) Committee will be comfortable projecting no change for policy rates in the year ahead," Michael Feroli, chief US economist at JP Morgan, wrote in a research note.

In afternoon trading, the dollar index gained 0.3% to 97.707. For the week, the dollar was still down 0.6%, its largest weekly loss since early November.

The dollar was up 0.1% against the yen at 108.59 yen, posting its worst weekly performance in nearly two months.

The euro, on the other hand, fell to 1.1058, down 0.4%.

Sterling cooled off a bit on Friday, down 0.3% against the dollar at $1.3128. The pound surged to a 2-1/2-year high versus the euro to 84.67 pence as traders grew more confident that the uncertainty over Brexit would end soon.