NEWYORK (MarketWatch) — The ICE U.S. Dollar Index rose for the second- straight week Friday, after the Bureau of Labor Statistics’s February nonfarm payrolls number exceeded expectations and the euro dropped to its lowest level versus the U.S. unit in more than 11 years.
The ICE U.S. Dollar Index DXY, +1.43% a measure of the buck’s strength against a basket of six rival currencies, finished the day up 1.3% to 97.63, its highest level in ,more than 11 1/2 years.
The dollar’s exchange rate with the euro comprises more than half of the index’s value.
Friday’s gains pushed the index to its largest annualized gain since March 1985.
The euro EURUSD, -1.70% was at $ 1.0844 in recent trade after falling to its lowest level since 2003 at $ 1.0839 after the jobs report. It had traded at $ 1.1030 late Thursday.
Several analysts, including Matthew Weller, a senior technical analyst at Forex.com, said the number means that a June rate hike remains on the table, despite a slate of weak U.S. economic data and dovish statements from Fed governors, including Fed Chairwoman Janet Yellen.
The euro has plunged against the dollar this week, after remaining relatively stable in February, as the European Central Bank prepares, on March 9, to begin buying €60 billion of public and private debt a month as part of a €1.1 trillion stimulus program announced in January.
Weller said currency traders will keep a close eye on economic data, as “modest” year-over-year wage growth of 2% and a downward revision to January’s employment number leave plenty of questions for the Fed.
“The bigger question is how economic data, prominently including job growth and employee wages, will evolve over the next few months, and today’s report doesn’t definitively provide a path to follow moving forward,” Weller wrote.
The dollar USDJPY, +0.59% retreated slightly after hitting a four-month high of 121.27 yen, nearing its highest level against the Japanese currency since the summer of 2007, compared with ¥120.14 late Thursday in New York. The buck also USDZAR, +1.70% rose to its highest level against the South African rand in 13 years after the report, trading at 12.05 rand to the dollar, compared with 11.84 Thursday.
The pound GBPUSD, -1.34% traded at $ 1.5037 after the report, its lowest level in about a month. It had traded at $ 1.5238 Thursday.
The next big focus for markets and currencies will be the launch of the ECB’s bond-buying program on Monday and the Federal Reserve two-day policy meeting on March 17.