The dollar hit a new 11-year high against major currencies on Friday as investors bet the monthly U.S. jobs report would add to the chance of rate hikes, even as the European Central Bank embarks on a 1 trillion euro campaign of bond-buying. The same balance of risks saw the gap between German and U.S. bond yields stretched to its widest in more than a quarter of a century as government bond yields across the 19-country euro zone took another step lower.
Brent crude oil rose to around $61 a barrel on Friday as fighting in Libya and Iraq stoked output worries, while traders kept a close eye on Iran nuclear talks that could eventually bring more supply to world markets. Fighting has escalated in northeast Iraq where Islamic State militants have set fire to oilfields to deter Shi'ite militiamen and Iraqi soldiers from advancing. In Libya, worsening security conditions have led to the closure of 11 oilfields. "The Libyan and Iraqi oilfield skirmishes are worrying," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Federal Reserve policymakers should not wait too long to raise interest rates, a top U.S. central banker said on Thursday, because doing so could mean "drastically" overshooting on inflation and forcing the Fed to hike rates dramatically. "I think that by mid-year it will be the time to have a serious discussion about starting to raise rates," San Francisco Fed chief John Williams said.