LONDON: The dollar rose against a basket of currencies on Friday along with Treasury yields, but global stocks fell after a key US jobs report painted a mixed picture of the labour market and left investors with a muddled view on rate hike prospects.

Non-farm payrolls increased by 151,000 jobs last month, well below forecasts of 190,000 while the unemployment rate was at 4.9 per cent, the lowest since February 2008, the Labour Department said on Friday. Surging wages also suggested the labour market recovery remains on track.

After the report, Fed funds futures contracts showed traders are pricing in a 40 per cent chance that the Federal Reserve will next raise rates in December. Before the report they expected the Fed to wait until well into next year before raising rates.

“The market is looking at different things, we’ve got the headline, which is a little bit softer, and the average hourly earnings that are much better,” said Aaron Kohli, interest rate strategist at BMO Capital Markets, New York.

US stock index futures turned negative after the data while European stocks also fell.

The dollar index rose 0.6 per cent to 97.05, having endured a pretty rough week. The dollar has shed 2.7 per cent this week as expectations that the Fed would raise rates at least once this year evaporated on signs of domestic weakness and broader concerns over global growth.

After a weak service-sector business sentiment report on Wednesday and dovish comments from New York Federal Reserve chief William Dudley, U.S money markets predicted no rise in official interest rates this year. The Federal Reserve’s own forecasts called for four increases.

US bond yields rose after the jobs report, with the 10-year yield rising to 1.87 per cent. Still, it has fallen by 10 basis points since the start of this month.

January was the weakest start to a year for shares since the aftermath of the 2008 financial crisis, and doubts over the US

economy — recently one of the few bright spots globally — have grown this week.

Short-term US bond yields were roughly stable on Friday but have fallen by about a third in the past month and by 10 basis points this week alone, driving the dollar to its weakest performance since late 2009.

“There is a general scepticism towards a proper rate hike cycle by the Fed — that’s been driving down the dollar (but) there’s probably not that much room left for dollar weakness,” said Commerzbank currency strategist Thulan Nguyen in Frankfurt. “A better labour market report could bring back some confidence in the rate cycle.” The dollar was flat on the day at 116.805 yen and 0.1 per cent stronger against the euro at $1.1199. Against a basket of currencies, it is down 1.3 per cent on the week.

After a weak service-sector business sentiment report on Wednesday and dovish comments from New York Federal Reserve chief William Dudley, U.S money markets now predict no rise in official interest rates this year. Earlier, the Federal Reserve’s own forecasting called for four increases.

That reflects growing concern the world is heading back into recession. But it also bolsters expectations for more support for global asset prices from stimulus measures by the world’s central banks.

Hong Kong’s Hang Seng rose 0.6 per cent and Malaysian

and Singapore stocks also gained. Tokyo, Shanghai and various commodity prices all fell.

Strategists said European bond markets looked to be pricing in a softer read from the US payrolls report.

“We doubt that even a strong nonfarm payrolls number will have the potential to alter the course,” said RBC’s chief European macro strategist, Peter Schaffrik.

“More importantly even, particularly for the fixed income market: The Fed seemingly is reacting to the equity market weakness, fearing the feed through into the real economy through a tightening in financial conditions.”