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Dollar advances against yen after US jobs data

Sean Gallup | Getty Images

The dollar rallied against the yen on Friday after stronger-than-expected U.S. jobs data stoked expectations the Federal Reserve may start reducing bond buying sooner than expected.

U.S. employers added 203,000 new jobs in November, exceeding expectations, and the jobless rate fell to a five-year low of 7.0 percent, the Labor Department said.

The dollar jumped 0.9 percent to 102.73 yen, having hit a session peak of 102.89 yen, according to Reuters data, and edging back towards a six-month high of 103.37 yen set earlier in the week. A reduction in the U.S. central bank's bond-buying activity would lift U.S. bond yields, boosting the currency. Still, some analysts doubted the report was strong enough to push the Fed to move in December. Fed policymakers meet on Dec. 17-18.

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The dollar's gains versus the euro were short-lived, as the single currency was boosted by rising short-term interest rates in the euro zone, a day after the European Central Bank damped hopes for an imminent easing move.

The euro hit a session low of $1.3627 after the U.S. jobs data, before rebounding to hit a five-week high of $1.3696. It was last at $1.3693, up 0.2 percent on the day. ECB chief Mario Draghi, after a policy meeting on Thursday, said the bank was ready to take fresh policy action to support a fragile recovery, but he was light on details, including whether the bank would cut bank deposit rates into negative territory.

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.1 percent to 80.283.

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