The dollar jumped to a seven-week high on Friday and was on track to post its best week since September 2022 after a surprisingly strong jobs report for September led traders to cut bets that the Federal Reserve will make further 50-basis-point rate cuts.

The greenback was also set for its best weekly percentage performance against the Japanese yen since 2009 as traders adjusting for a less dovish Fed and a more dovish Bank of Japan sparked a rapid repricing in the currency pair.

US nonfarm payrolls increased by 254,000 jobs last month, beating the 140,000 new jobs that economists polled by Reuters had anticipated.

The unemployment rate also unexpectedly slipped, to 4.1 percent from 4.2 percent in August.

It is a "blockbuster payrolls report by any measure. I think a no-landing scenario for the US economy has suddenly become far more plausible," said Karl Schamotta, chief market strategist at Corpay in Toronto.

"The expectation now would be for a Federal Reserve that treads far more cautiously in easing policy," Schamotta said.

Improving economic data and more hawkish comments from Fed Chair Jerome Powell on Monday, when he pushed back against expectations of continuing hefty rate cuts, led traders to reduce bets on a 50-basis-point reduction at the Fed's next meeting, on Nov. 6-7.

Those odds were completely wiped out after Friday's data. Traders are now pricing in no chance of a 50-basis-point rate cut, down from around 31 percent earlier on Friday and 53 percent a week ago, the CME Group's FedWatch Tool shows. A 25-basis-point reduction is seen as almost certain, with traders also seeing a small chance that the Fed will leave rates unchanged.

US stocks closed solidly higher on Friday, as a stronger-than-expected jobs report reassured investors who had worried the economy may be slowing too rapidly.

Bank of America expects the Fed to cut rates by 25 basis points per meeting through March 2025, followed by reductions of 25 basis points each quarter until the end of 2025, BofA US economist Aditya Bhave said in a report on Friday.

"The data flow since the Fed's decision to cut by 50bp in September has been remarkably positive," he said, calling Friday's report "A-plus."

Chicago Fed President Austan Goolsbee called the data "superb" and said more labor market data along those lines would boost his confidence the economy is at full employment with low inflation.

The dollar index reached 102.69, the highest level since Aug. 16, and was on track for its best weekly percentage gain since September 2022. The euro slipped to $1.09515, the lowest since Aug. 15.

The dollar gained to 149.02 yen , the highest since Aug. 16.