TOKYO/NEW YORK (Nov 6): The dollar rose to a seven-year high against the yen as signs of strength in the U.S. economy backed speculation that the Federal Reserve will increase interest rates next year.

The Bloomberg Dollar Spot Index headed for its highest close since April 2009 after data showed employers added more jobs than economists forecast. The Labor Department reports payrolls tomorrow. Australia’s dollar fell to a four-year low after the price of iron ore, a key export, declined to its cheapest level in more than five years and the unemployment rate held at an almost 12-year high. The euro held a loss from yesterday before the European Central Bank sets policy today.

“The dollar continues to be solid,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “Economic data out of the U.S. have been relatively strong lately. We expect the Fed to raise rates in June and U.S. yields, which are pricing in a hike around the third quarter, to play catchup, pushing dollar-yen higher.”

The dollar rose 0.2 percent to 114.91 yen as of 11:05 a.m., after surpassing 115 yen for the first time since November 2007. The U.S. currency added 0.1 percent to $1.2492 per euro.

The yen fell 0.2 percent to 143.37 per euro. It weakened 3.9 percent versus the 18-nation currency in the previous five sessions.

Bloomberg’s dollar index, which tracks the currency against 10 major peers, was little changed at 1,091.99, extending this year’s advance to 7.1 percent, which would be the biggest annual gain since 2008.

Jobs Market

The Fed is moving closer to its first interest-rate increase in eight years after finishing its program of asset purchases last month, citing an improving jobs market.

Employers in the U.S. added 235,000 jobs in October, according to the median forecast of economists surveyed by Bloomberg News before the government report tomorrow. Economists estimate the jobless rate held at 5.9 percent last month, the lowest since July 2008.

The ADP Research Institute in Roseland, New Jersey, said yesterday companies hired 230,000 workers in October, more than the 220,000 predicted by economists in a separate Bloomberg survey.

In Australia, the jobless rate held at 6.2 percent in October for a second month, matching the highest since March 2003, the statistics bureau said in Sydney today. The number of people employed rose by 24,100 last month from September, the data showed. That was more than the economists’ forecast of a 20,000 increase.

The Aussie was little changed at 85.91 U.S. cents, after touching 85.54, the lowest since July 2010. New Zealand’s dollar slid 0.2 percent to 77.11 U.S. cents, after earlier reaching 76.68, a level unseen since June 2012.

A measure of foreign-exchange market price swings rose to the highest in more than a year. Deutsche Bank AG’s Currency Volatility Index jumped to 8.6 percent, the highest since Oct. 1, 2013 on a closing-price basis. It was at an all-time closing low of 4.9 percent on July 21.