The US dollar held close to an 18-month high against the euro in early trade on Monday, keeping most of the gains it made on Friday after a stronger than expected American jobs report pushed up bets that the Federal Reserve will raise interest rates in December.

The dollar index, which measures the currency against six major rivals including the euro, was steady at 102.20 early on Monday after leaping around 0.7 per cent on Friday, its biggest daily rise in nearly six months. The euro edged up 0.1 per cent to $1.11485, after slumping 0.7 per cent on Friday and hitting a low of $1.1132, not far from its weakest level since May 2025.

Sterling edged up 0.1 per cent to $1.3360 on Monday, recovering slightly after Friday's dollar surge, while the greenback eased 0.1 per cent to C$1.4119 against the Canadian dollar. On Friday the US currency had surged 1.1 per cent against the loonie after Canadian data showed surprise job losses.

Friday's jobs report showed US employers added 165,000 jobs in October, more than double the roughly 65,000 to 75,000 economists had forecast, while unemployment fell to 4.1 per cent. Wages also rose faster than expected, up 0.4 per cent on the month and 3.1 per cent on the year, and earlier months were revised up by a combined 84,000 jobs.

Futures markets now imply around 79 per cent odds that the Federal Reserve will raise rates on 9 December, compared with 71 per cent a week earlier, according to CME Group's FedWatch tool. Bets on a December rise had been receding during the rout in global technology shares, as investors worried about the outlook for artificial intelligence investment and profitability, but the jobs data revived them.

Comments from Federal Reserve officials on Friday also supported the case for a rise. New York Fed President John Williams said US economic growth had remained remarkably resilient in the face of successive shocks but inflation was too high and it was essential to bring it back to 2 per cent. St Louis Fed President Alberto Musalem said inflation remained a top concern in conversations with businesses, while San Francisco Fed President Mary Daly said the Fed would likely still need to raise rates further even with the painful technology stock sell-off.

"The Blue Sweep has put the AI trade to the test given risks for heavier AI regulation and a slow down in the CAPEX cycle. At the same time, however, economic realities continue to surprise to the upside — data momentum remains very strong across indicators," Barclays strategists wrote in a report. "This combination is yet to dent the dollar's appeal."

Elsewhere, the Australian dollar added 0.3 per cent to $0.6875 after tumbling more than 1 per cent on Friday to its lowest since 31 March, while the dollar eased 0.2 per cent to 158.185 yen following Friday's 0.6 per cent jump. Bank of Japan Governor Kazuo Ueda said on Friday that the central bank expected underlying inflation to stay around its 2 per cent target but recognised there were "some upside risks".

The New Zealand dollar climbed 0.4 per cent to $0.5557 on Monday, bouncing back after hitting a low of $0.5529 at the end of last week. Preliminary results from the weekend's election gave Prime Minister Christopher Luxon's National Party, ACT New Zealand and New Zealand First 67 seats in the 131-seat parliament, one more than the 66 needed for a majority. But almost 400,000 votes, nearly 15 per cent of the total, have yet to be counted, and official results are not due until 27 November.

The next test for the dollar comes on Tuesday with the US consumer inflation report, followed by UK third-quarter GDP figures on Thursday, which will show whether Britain's economy is growing as strongly as the Bank of England expects after it raised Bank Rate to 4 per cent last week.