FOREX-US dollar firms as strong jobs data supports Fed easing pause

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      US dollar hits six-month high vs yen


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      Euro falls to lowest since Nov. 22 vs dollar


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      US dollar index on track for sixth weekly gain


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      Sterling falls to lowest since Nov. 2023 vs dollar


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      US rate futures price in just one rate cut in 2025



 (Adds new comment, graphics, updates prices)
    By Gertrude Chavez-Dreyfuss
       NEW YORK, Jan 10 (Reuters) - The U.S. dollar rallied on Friday
after data showed the world's largest economy created more jobs than
expected last month, reinforcing expectations that the Federal Reserve
will pause its rate-cutting cycle at its policy meeting later this
month.
    The greenback also extended gains following a report that showed
U.S. consumer inflation expectations for the next year and beyond
jumped in January.
    The dollar rose to its highest since July against the yen after
the data, before turning lower on the day. It was last down 0.1% at
157.845 yen.
        The euro, on the other hand, dropped to its lowest since
November 2022 versus the greenback. The single euro zone currency was
last down 0.5% at $1.0244, falling for a second straight
week. A significant number of foreign exchange forecasters expect the
euro to reach parity with the dollar in 2025, a Reuters poll showed
this week.
    The greenback's rally kicked off after a Labor Department report
showed that the U.S. economy added 256,000 jobs in December, much
higher than economists' forecasts for an increase of 160,000. The
November jobs number, however, was revised downward to 212,000.
    The unemployment rate, meanwhile, dipped to 4.1%, compared with
expectations of a 4.2% reading, while average hourly earnings
increased 0.3% last month after gaining 0.4% in November. In the 12
months through December, wages advanced 3.9% after rising 4.0% in
November.
    "The strength of the December payrolls data clearly removes any
need for the Fed to cut rates with urgency," wrote Jane Foley, head of
FX strategy, at Rabobank in London.
        "For a while it has been Rabobank's central view that the Fed
will cut rates just once this year. However, if (Donald) Trump wastes
no time in initiating his policies, it is conceivable that window
could close altogether."

        Trump, during his campaign, vowed to impose tariffs, cut
taxes, and undertake mass deportation of undocumented immigrants, all
of which are widely viewed as inflationary.





    A University of Michigan's consumer sentiment survey indicating a
rise in inflation expectations also supported the dollar.
        The report showed that
    one-year inflation expectations jumped
     to 3.3% in January, the highest level since May, from 2.8% in
December. That raised the 12-month inflation expectations above the
2.3%-3.0% range seen in the two years prior to the COVID-19 pandemic.

        Following the U.S. data, the U.S. rate futures market has
fully priced in a pause in the Fed's easing cycle at the January
meeting, according to LSEG estimates. The market has also priced in
just 27 basis points (bps) of easing in 2025 or just one rate cut,
with the first rate move likely at the June meeting.
    In other currencies, sterling tumbled to its weakest level since
November 2023 against the dollar, last changing hands at $1.2208, down
0.8%. It dropped as well on Thursday in tandem with a selloff
in gilts and concerns about British government finances.
    In Japan, prospects of sustained wage gains and the boost to
import costs from a weak yen have heightened attention within the
central bank to rising inflationary pressures that may lead to an
upgrade in its price forecast this month, sources said.
    The dollar will end the week up 0.4% versus the yen. The U.S.
currency has risen in five of the last six weeks against the Japanese
unit.
        The dollar index, meanwhile, advanced to its highest
since November 2022, and was on track for a sixth consecutive weekly
gain. That's its longest run since an 11-week streak in 2023. The
index was last up 0.4% at 109.68.
    "The biggest risk to that U.S. dollar bullish view would be if
participants seek to take profit, trim risk early next week ahead of
Trump's inauguration," said Michael Brown, senior research strategist,
at Pepperstone in London.




 Currency
 bid
 prices at
 10
 January?
 08:24
 p.m. GMT
 Descripti  RIC    Last      U.S.       Pct     YTD Pct  High     Low
 on                          Close      Change           Bid      Bid
                             Previous
                             Session
 Dollar     07
 Euro/Doll  212
 Dollar/Ye  305
 Euro/Yen   22
 Dollar/Sw  15
 Sterling/  194?
 Dollar/Ca  76
 Aussie/Do  139
 Euro/Swis  86
 Euro/Ster  66
 NZ         43
 llar
 Dollar/No  921
 Euro/Norw  174
 Dollar/Sw  36
 Euro/Swed  75


 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saqib
Iqbal Ahmed in New York and Greta Rosen Fondahn in Gdansk; Editing by
Christina Fincher and Andrea Ricci)