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* U.S. economy creates 222,000 jobs in June
* Average hourly earnings post lower-than-expected growth
* Fed still on track to raise rates in December (Adds comment, details, byline, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 7 (Reuters) - The dollar gained across the board on Friday in choppy trading after a report showed the U.S. economy created far more jobs than expected in June and the previous months, keeping the Federal Reserve on track to raise interest rates at least once this year.
Following the jobs report, the dollar rose to two-month highs against the yen, on pace to post its largest weekly percentage gain since late April. The greenback also rose to a more than one-week peak against sterling.
Friday's data showed U.S. non-farm payrolls jumped by 222,000 jobs last month, beating economists' expectations for a 179,000 gain. Data for April and May was revised to show 47,000 more jobs created than previously reported.
"We view today's report as supportive of the Fed view that they can hike an additional time later this year, while starting to reduce the balance sheet in the fall," said Marvin Loh, senior global markets strategist at BNY Mellon in Boston.
But while the employment headline number was strong, inflation pressure was still tame. Average hourly earnings, which currency and bond traders also monitor closely, increased just 0.2 percent in June, down from expectations of a 0.3 percent rise.
Loh said hourly earnings' 2.5 percent gain from a year earlier were disappointing, with growth slower than at the start of the year and mostly stagnant over the past several months.
The dollar initially weakened to 113.54 yen following the jobs report from 113.74 yen minutes before the data's release, as investors focused mostly on the inflation implications of the average earnings growth. It was last at 113.88, up 0.6 percent.
The euro, on the other hand, rose to around $1.1430, from $1.1411 ahead of the jobs report, and was last at $1.1395, down 0.2 percent. That pushed the dollar index up 0.3 percent at 96.042
Sterling, meanwhile, fell to a more than one-week low of $1.2871 and was last down 0.7 percent at $1.2882.
After the jobs data, U.S. short-term interest rate futures reflected continued bets that the Fed would raise interest rates in December. (Editing by Lisa Von Ahn)