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Dollar rallies after robust US jobs report

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The dollar rallied across the board on Friday after data showed U.S. employment increased more than expected in July and wages picked up, raising the probability of an interest rate hike from the Federal Reserve this year.

The dollar hit one-week peaks against the euro and the Swiss franc, and turned positive versus the yen after the jobs data.

U.S. non-farm payrolls increased by 255,000 jobs last month, after an upwardly revised 292,000 surge in June. Economists polled by Reuters forecast an increase of 180,000 in July.

"This represents more of a return to the form of the first six months of the year, and indicates Fed Chair Janet Yellen is presiding over a strong but not spectacular U.S. economy," said Dennis De Jong, managing director at broker-dealer UFX.com in Limassol, Cyprus.

"The unemployment rate has ticked down further to pre-2008 crash levels, and wages rising in kind will be music to the ears of those observers hoping for a rate hike."

After the U.S. employment report, Fed fund futures priced in an 18 percent chance the Fed will hike rates at its policy meeting next month, from 9 percent late Thursday, according to the CME's FedWatch tool. For the December meeting, futures showed a roughly 47 percent probability of a hike, compared with about 32 percent late Wednesday.

In early morning trading, the dollar index rose 0.48 percent to 96.24, recovering from last week's poor showing when it fell 2 percent for its worst weekly performance since April.

Against the yen, the dollar rose 0.57 percent to 101.79 yen, and it hit a one-week high against the Swiss franc. The dollar was last at 0.98 franc, up 0.65 percent

The euro, meanwhile, slid to a one-week low against the dollar and last traded at $1.11, down 0.34 percent.