U.S. jobs data due this week may hold the key to whether the Federal Reserve will raise interest rates for the first time since 2006 in December, signaling its intention to end an era of almost-free dollars.

    An increase in the Fed’s rates would have consequences well beyond U.S. borders, increasing borrowing costs for dollar-debtors in emerging markets, pushing up the greenback against some major currencies and driving a global reallocation of investment money.

    The Fed, which has a dual mandate including both inflation and employment, put a December rate hike firmly in play last week and investors will be scrutinizing the U.S. employment data out Friday to work out the odds of such a move.

    Analysts polled by Reuters expect U.S. employers outside the agricultural sector to have added 180,000 jobs in October and overall earnings to have increased by 0.20 percent during the month.

    “If we get 175,000 or 180,000 (new jobs) and wages up three-tenths of a percent, that significantly increases the probability that the Fed will raise rates in December,” said Mickey Levy, an analyst at Berenberg in New York.

    HSBC economists also said that average job gains above 150,000 a month in October and November may be enough to keep a December rate hike on the table for most members of the Fed’s Federal Open Market Committee.

    Financial markets are pricing in a 50 percent probability that the Fed will increase its main interest rate to 0.25 percent or even 0.50 percent from the current 0.125 percent Dec. 16, according to data compiled by CME Group.

    The state of the U.S. labor market is not the only concern for the Fed, which made an explicit reference to “uncertainty abroad” when it decided to hold rates steady in September.

    Even though this reference disappeared in the October policy statement, lower growth in emerging markets such as China and falling oil prices has taken a toll on U.S. manufacturers.

    A survey due to be published today is expected to show activity in the U.S. manufacturing sector marked time in October, losing further momentum from the month before

    The U.S. non-manufacturing sector, however, was chalking up solid growth, albeit at a slightly lower pace than in September, another survey is expected to show Tuesday.

    Across the Atlantic, the chances of any rate hike are still seen as remote.

    The Bank of England (BoE) is forecast to hold interest rates steady Thursday, with just one member of its monetary policy committee seen voting for raising the main rate from the current 0.50 percent.

    The BoE is also expected to cut its growth and inflation projections. Britain’s economic recovery slowed more than expected in the three months to September after a slump in construction, raising the prospect that more than two years of relatively rapid economic growth is coming to an end.

    A Reuters poll published before the latest U.K. GDP data found the BoE was not expected to raise rates until the second quarter of next year and, in any case, not before the Fed.(SD-Agencies)