Dollar jumps as surprise upside beat in U.S. payrolls sparks short-covering rally

The greenback snapped its recent losing streak and rose against majority of its peers on Friday as the release of robust U.S. non-farm payrolls data increased speculation of a larger interest rate hike from the Federal Reserve in March.  
  
Reuters reported the U.S. economy created far more jobs than expected in January even as raging COVID-19 infections disrupted activity at consumer-facing businesses, pointing to underlying strength in the labor market.      
The survey of establishments in the Labor Department's closely watched employment report on Friday showed nonfarm payrolls increased by 467,000 jobs last month. Data for December was revised higher to show 510,000 jobs created instead of the previously reported 199,000.    Their Economists poll forecast 150,000 jobs added in January. Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.  
  
Versus the Japanese yen, although dollar rebounded from Asian low at 114.82 to 115.14 in early European morning, price retreated again to 114.78 ahead of New York open. Price then jumped on the release of robust U.S. NFP data to session highs of 115.42+ before easing, price last traded at 115.19 near the close.  
  
The single currency traded with a firm bias after Thursday's rally on ECB Lagarde's hawkish comments and rose to an 11-week high of 1.1483 in European morning. However, the pair then erased its gains on usd's broad-based strength in post-NFP trading and briefly tumbled 1.1412 but later recovered to 1.1463 on active cross-buying in euro.   
  
Reuters reported retail sales in the euro zone were much weaker than in expected in December despite the Christmas shopping season, amid a record rise in consumer prices, data showed on Friday.  
  
The European Union's statistics office Eurostat said retail sales in the 19 countries sharing the euro fell 3% month-on-month for a 2.0% year-on-year rise. Economists polled by Reuters had expected a 0.5 monthly fall and a 5.1% annual rise.  
  
The British pound met renewed selling at 1.3614 in Asian morning and fell to 1.3552 in European morning due partly to cross-selling of sterling especially vs euro. Intra-day decline accelerated at New York open on usd's strength and cable dropped to session lows of 1.3505 before recovering in tandem with euro to 1.3550. Price last traded at 1.3529 near the close.  
  
In other news released by Reuters, European Central Bank policymaker Francois Villeroy de Galhau pushed back against market bets on an upcoming interest rate hike on Friday, saying one "shouldn't rush to conclusions" about the timing of an ECB move.    "While the direction of the journey is clear, one shouldn't rush to conclusions about its calendar: it will remain gradual, state dependent, and open in each of its steps," Villeroy, the Banque de France governor, said in a statement.  
  
Data to be released this week:  
  
New Zealand market holiday, Australia services index, retail sales, China services PMI, Japan leading indicator, Swiss unemployment rate, UK house prices, Germany industrial output, Italy unemployment rate, industrial output and EU sentix index on Monday.  
  
Japan household spending, current account, trade balance, Eco watchers outlook, Australia business conditions, business confidence, France imports, exports, current account, trade balance, Italy retail sales, Canada imports, exports, trade balance, U.S. trade balance and redbook retail sales on Tuesday.  
  
Australia consumer sentiment, China CPI, PPI, UK retail sales, Germany imports, exports, trade balance, Canada leading index, U.S. mortgage applications, wholesale inventories and wholesale sales on Wednesday.  
  
Japan producer prices, Australia consumer inflation, UK GDP, U.S. CPI, core CPI, jobless claims and Federal budget on Thursday.  
  
New Zealand manufacturing PMI, retail sales, Japan market holiday, UK industrial output, manufacturing output, constriction output, trade balance, Swiss CPI and U.S. consumer sentiment on Friday.