Dollar reaches fresh highs on data as euro tumbles

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The dollar jumped on Friday to an 11-1/2 year high against a basket of currencies as news of robust U.S. employment growth bolstered market sentiment that the Federal Reserve was closer to raising interest rates.

Before a U.S. employment report on Friday, the dollar had already hit an 11-1/2 year high against the euro as interest rate differentials between America and Europe widened in favor of U.S. Treasurys.

The euro was last at $1.0851 against the dollar, off nearly 2 percent for the day. It slipped below $1.10 on Thursday, when the European Central Bank set a Monday start for a 1.1 trillion bond-buying program meant to lower euro zone interest rates.

The dollar index, which values the greenback against six other major currencies, was last up about 1.33 percent at 97.66 after reaching 97.72 for the first time since 2003.

The dollar's gains accelerated after the government reported that U.S. nonfarm payrolls grew by 295,000 in February, exceeding expectations of 240,000, and the unemployment rate fell to a 6 1/2-year low of 5.5 percent.

Read MoreECB ups growth forecasts; will start QE on March 9

"We feel the economy is in a position for the Fed to begin normalizing policy," said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, North Carolina. "We think it is on the path to make a rate change in June."

Dollar/euro parity matter of when, not if: Strategist
Dollar/euro parity matter of when, not if: Strategist   

"What we have now is what markets speculated about for quite some time, which is a combination of more quantitative easing for the ECB and the market positioning itself for the start of a Federal Reserve hiking process," said Jane Foley, senior currency strategist at Rabobank in London.

Read MoreNowhere but down?Euro reacts to QE

The dollar also rose sharply against the Japanese yen after the jobs data. It was last up 0.49 percent at 120.75 yen, according to Thomson Reuters data.

The British pound also fell sharply against the dollar on Friday, dropping to four-week lows, and it's on track for a drop of some 2.3 percent over the week—its biggest weekly loss since late 2011. The Sterling was last down about 1 percent at $1.503 against the greenback. It was also firmer against the euro, trading at 72 pence , its highest since December 2007.