The Federal Reserve has said it expects to end its $85 billion monthly asset purchases when the unemployment rate drops to around 7 percent, so Friday's report could shape market expectations for when the central bank begins tapering off its purchases.
"There's no question that this is a welcome report," Adam Hersh, Center for American Progress economist, said. "We're creating jobs faster than we were and faster than we thought. And we should be happy about that. That doesn't mean we're out of the woods yet."
Treasury yields surged to 2.6 and the dollar slid against the euro after the report.
"If we can get a number just a bit better than inline Friday, I think this attempt to gap through the 50-day (moving average) at $1,622 could be sustained," said Scott Redler of T3Live.
The S&P 500, indicated sharply higher, has been struggling to break above the 50-day moving average.
"This could open the door for a move back to the 2013 highs. Lots of market participants were trying to figure out if we saw the summer lows. Friday's action will give some answers," Redler said.
Bank of Tokyo-Mitsubishi's Derek Halpenny said that an "outlier" payrolls number on Friday could have a disproportionate impact on markets, due to understaffing after the July 4 bank holiday.
(Read More: July 4: Independence Day for Europe's Central Banks?)
"At some point the U.S. will print a big jobs report – if that was today, the dollar would soar," Halpenny said in a research note on Friday.
(Read More: Expect Schizophrenic Reaction to Jobs Report: Gartman)
No major U.S. earnings are expected on Friday. Second quarter earnings season will kick off with numbers from Dow component Alcoa on Monday.
Asia shares tracked strong gains in European markets on Friday, which were boosted after both the European Central Bank and the Bank of England offered forward guidance on policy for the first time, and said record-low interest rates would be maintained for a prolonged period.
Meanwhile, European officials have threatened to suspend data sharing with the U.S., over claims that its intelligence agencies have been spying on Europe's cizens and embassies. The spying row threatens to overshadow talks of a huge EU-U.S. free trade deal, due to start next week.