By Rae Wee

SINGAPORE (Reuters) – The dollar began the week on a strong note, leaving its peers languishing near multi-year lows after a blowout U.S. jobs report that highlighted the outperformance of the world’s largest economy.

The euro and the New Zealand dollar were near two-year troughs at $1.0242 and $0.5565, respectively. Trading was thinned with Japanese markets closed for a holiday.

The Australian dollar struggled at its weakest level in over four years at $0.6139, up 0.1% at $0.6153.

Data showed U.S. job growth unexpectedly accelerated in December, with the unemployment rate falling to 4.1%. This has led traders to scale back bets on Federal Reserve rate cuts this year.

Nick Rees, head of macro research at Monex Europe, stated, “This latest round of data underlines the fact that U.S. economic exceptionalism remains a key market theme to start 2025.”

Market expectations now price in just 27 basis points of Fed rate cuts this year, down from 50 bps previously.

Expectations for a less aggressive easing cycle are heightened by U.S. President-elect Donald Trump’s proposed import tariffs, tax cuts, and immigration restrictions, which could increase inflation. Data on U.S. inflation is due on Wednesday.

The U.S. dollar was firm at 109.67 against a basket of currencies, its strongest since November 2022.

Against the dollar, the yen fell 0.12% to 157.92, although Bank of Japan policymakers may raise their inflation forecast at an upcoming meeting.

Sterling rose 0.07% to $1.2204 but remained near a 14-month low due to concerns over rising borrowing costs in Britain.

In China, the offshore yuan was little changed at 7.3605 per dollar, following the People’s Bank of China’s suspension of treasury bond purchases, which briefly lifted yields.