The dollar fell from a 20-year high on Friday after the release of US jobs data, which showed the economy added 315,000 jobs in August. The unemployment rate rose to 3.7%, from a half-century low of 3.5% in July, as more Americans came off the sidelines to look for jobs and didn’t find work immediately.

The US currency has been rising since Federal Reserve Chair Jerome Powell said at the Jackson Hole Symposium in Wyoming last Friday that rates would need to be high for some time to control inflation.

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The dollar index – which monitors currency against its six counterparts – touched a fresh 20-year high of 109.99 on Thursday, prompted by US data showing a decline in unemployment claims. The index slipped 0.52% to 109.12 in early US trading hours on Friday.

Nonfarm payrolls rose by 315,000 jobs in August, marking the 20th straight month of job growth. This gives the Federal Reserve some leeway in raising interest rates later this month. Fed funds futures are pricing about 75% that the Fed raises rates by 75 basis points (bps) this month and it has been a week of heavy selling in the US Treasury market.

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“Overall what we’re seeing is the market is still bracing for potentially much more aggressive Fed tightening,” said Edward Soya, senior market analyst at Panda.

He noted that the jobs report showed average hourly wages beginning to fall, which could help dampen price pressures.

“Inflation is starting to show some signs that it could be slowing, but there is no strong consensus on that,” he added.

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The euro retraced some of the previous day’s losses against the dollar and inched back above parity, up 0.73% to $1.0019.

The European Central Bank meeting is scheduled for next week, with money markets expecting an unprecedented 75 basis points hike.

Sterling rose 0.02% against the dollar to $1.1546 but remains down around 1.6% this week. Britain’s new prime minister will be announced on Monday, when the ruling Conservative Party’s leadership contest concludes, which could encourage further pound moves.

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The dollar was up 0.11% at 140.355 against the rate-sensitive Japanese yen.

The dollar jumped above 140 yen for the first time since 1998 on Thursday, and the yen slipped to a fresh low of 140.43.

Japan’s government will take “appropriate” action as needed, said Japanese finance minister Shun Suzuki on Friday.