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According to the Wall Street Journal the dollar is gaining. Start trading on the dollar now.

TORONTO (Dow Jones)–The dollar extended its gains across the board Friday afternoon as rival currencies capitulated to the greenback’s show of strength on expectations U.S. interest rates could rise earlier than previously thought.

The dollar’s renewed rally took it to its biggest single-session advance on the yen so far this year, up 2.8% on the day. It hit a one-month peak versus the yen and its highest level in two weeks against the euro.

The Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, also hit a one-month high, up 1.7% since late Thursday.

The afternoon push was an extension of earlier U.S. dollar buying rather than a response to any new developments, traders said. A better-than-expected U.S. employment report for November had incited the dollar rally, as it raised expectations the Federal Reserve would be able to hike rates sooner than once believed.

“The dollar’s just been bid, bid, bid,” said Steve Butler, director of foreign exchange at Scotia Capital in Toronto. “There’s been no pullback, so the market’s finally giving up,” he said.

Friday afternoon, the euro was at $1.4828 from $1.5075 late Thursday, according to EBS via CQG. The dollar was at Y90.70 from Y88.22, while the euro was at Y134.47 from Y132.96. The U.K. pound was at $1.6428 from $1.6561. The dollar was at CHF1.0186 from CHF0.9999.

The Dollar Index was at 75.904 from 74.629.

The dollar gained broadly Friday, not only taking the wind from the euro and yen, but also from high-flying risk-positive currencies, such as the Australian and New Zealand dollars.

Even the Canadian dollar succumbed to U.S. dollar strength and slipped into negative territory in afternoon trading after rallying on Canada’s own robust job gains in the morning. The U.S. dollar was at C$1.0591 in afternoon trading from C$1.0537 late Thursday.

In the U.S., economists had expected November job losses of 125,000, but the data came in much better, with the U.S. labor market having lost only 11,000 jobs, an improvement from the revised 111,000 jobs lost in October. The unemployment rate was expected to remain unchanged at 10.2% but it dropped to 10.0%.

In the recent past, positive U.S. data have tended to trigger selling of the dollar as investors rushed to embrace more risk-sensitive currencies such as the euro. But that pattern was reversed Friday as market players perceived the strong U.S. data as suggesting the U.S. central bank could embark on rate hiking earlier than previously believed.

“To a certain extent you’re seeing a reversal of these risk trades,” said Stuart Bennett, senior currency strategist at Calyon in London.

Whether the risk trade more permanently unwinds depends on whether good economic data continue boosting the U.S. dollar–and whether those good economic data keep flowing at all, Bennett said.

If U.S. economic data continue to improve, the dollar’s recent relationship to investor risk sentiment could change, with the greenback gaining on positive news, as opposed to higher-yielding currencies enjoying all the fruits of an improving economy.

The positive November jobs report “tends to strengthen the hand of those who believe the recovery is building momentum,” said Alan Ruskin, global head of currency strategy for RBS Global Banking and Markets in Greenwich, Conn.

The better-than-expected jobs data likely push up by “at least a month” the date that the Federal Reserve will increase key U.S. interest rates, which Ruskin said should happen in the second half of 2010.

Also bolstering the case for an improving U.S. economy was the Friday morning release of U.S. factory orders, which rose for the sixth time in seven months in October, posting a 0.6% gain on the heels of stronger than previously estimated growth in September.

The increase beat expectations from economists surveyed by Dow Jones Newswires, who were expecting factory orders would be unchanged.