The US dollar rebounded strongly on Friday, giving it the strongest week since January in the wake of the much better than forecast US jobs figures.
The greenback jumped against the yen and euro after the November jobless report, sending gold and other commodities lower.
Gold was the hardest hit, plunging 4% or more at times to well under $US1200 an ounce and well off the all time highs hit on Thursday.
US interest rates rose as well as the market lifted its estimation of when the first rate rise would appear from the Fed, which meets for two days next week.
A rise won’t come from that meeting, but economists say the odds are now firming for at least one increase in 2010, instead of none.
Driving the speculation was the news that US employers ‘only’ cut 11,000 non-farm jobs last month while markets had expected job losses of 125,000-130,000.
The unemployment rate eased from the 26 year high of 10.2% in October to 10% last month as more part time jobs were created for the 5th month in a row.
The dollar jumped above 90 yen for the first time in three weeks after trading under 85 yen only a week before and sending chills through Japanese business and the government.
The greenback jumped 4.7% to 90.56 yen last week, the biggest gain since February 1999.
The euro fell below $US1.49 and headed for its biggest one-day decline since July.
US gold futures settled below $US1170 an ounce on Friday, losing 4% on the day.
Comex February gold settled down $US48.80 at $US1169.50 an ounce.
Spot gold was at $US1155.80 an ounce, against the previous session in New York at $US1207.10, and its biggest one-day percentage loss since December 1 2008
The dollar rose above 90 yen for the first time since November 13 and finished up 1.8% at 90.56 yen while the euro fell 1.3% to $1.4858, well off a $1.5091 peak.
The Australian dollar settled at 91.57 US cents, roughly unchanged over the week, but well under the highs of more than 92 US cents midweek.
The Aussie rose 5.6% last week to 82.83 yen. New Zealand’s dollar jumped 5.4% to 64.87 yen.
Gold futures for February delivery slipped $45.40 to $1,172.20 a troy ounce on Friday morning.
This is after gold prices hit settled at $1,218.30 on Thursday, an all-time high when not adjusted for inflation.
The employment report also saw Wall Street rise sharply, then retreat as traders realised a rate rise had been brought closer.
But the rebound in the greenback took the wind out of gold prices, which have been rising with little interruption since breaching the $US1,000 mark for the first time in months on September 8.
Oil traders couldn’t decide whether the jobs figures were good or bad for them: good because the US economy may be healthier than expected or worried that the dollar was rallying.
After trading actively, crude was down 1.6% at $75.47.
Oil prices fell nearly $US1 to below $US76 a barrel on Friday, pressured by a stronger US dollar which outweighed better-than-expected US jobs data.
US crude futures fell 99 cents to settle at $US75.47. Brent crude lost 84 cents to settle at $US77.52.
The US dollar jumped against the yen and the euro, making dollar-denominated commodities like crude more expensive for holders of other currencies, helping pressure prices.
In earlier trading, crude rose to near $US78 a barrel after the US jobs report, but the rebound in the greenback hit sentiment hard.
Ministers from the OPEC are due to meet on December 22.
No change in OPEC’s output policy is expected after Saudi Arabian Oil Minister Ali al-Naimi told reporters in Cairo that he was satisfied with the trading range of $US70-$US80 seen in recent weeks.
Reuters and Bloomberg quoted him as saying "Right now you see the price is ok between $US70 and $US80, it’s close to the target we set, it’s almost $US75 – it’s good".
OPEC’s Secretary-General Abdullah al-Badri told Reuters on Thursday the group should be cautious as it needs to balance signs of economic recovery and abundant supplies.
He said oil inventories remained above their five-year average and there were 165 million barrels of crude and products floating at sea, equal to almost two days’ global demand and more than some estimates.
Other commodities were hurt by the rising greenback.
Copper fell from its highest level for around 15 months.
Comex March copper slipped to $US3.2375 a pound, trimming the week’s gain to 3.6%.
