The dollar index fell 0.546% at 95.734, and was poised for its biggest drop since Nov. 26, when concerns about the Omicron COVID-19 variant began to rattle markets. Even with Friday’s weakness, the dollar was still on track for a slight weekly gain, its first in three weeks.

The Labor Department said nonfarm payrolls rose by 199,000 last month, well short of the 400,000 estimate. But analysts noted underlying data in the report appeared sturdier, with the unemployment rate falling to 3.9% against expectations of 4.1% while earnings rose by 0.6%, indicating tightness in the labor market.

The report also increased expectations the Fed will begin to hike interest rates at its March meeting, with futures on the federal funds rate implying a 90% chance of a hike, up from 80% on Wednesday.

“While the headline might have fallen short of the consensus, the consensus doesn’t matter much to the Fed. For them, this probably justifies their hawkish tilt,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

“We’ll have to see how whether they walk the walk of their hawkish talk, but the odds are rising for a rate hike in March or May and a balance sheet run-off beginning later next year.”

On Wall Street the benchmark S&P 500SPX> was modestly lower, while the yield on the benchmark 10-year U.S. Treasury note touched 1.80%, its highest since January 2020.