The dollar retreated late Friday against the euro, erasing its slight gains early in the day after the publication of the monthly report on US employment, despite good data, reveals a less than expected rise in compensation.
This moderate increase suggests that the Fed is not under pressure to quickly raise rates,” a rather popular view of Wall Street brokers. All in all, these statistics are again proof that the United States is not close to recession as many analysts expected late 2018.
For the first time since December 1969, the unemployment rate in the United States fell to 3.6% in April, falling two tenths of a point from March.
Job creation was again very strong at 263,000, well above analysts’ expectations of 200,000, according to official employment figures released by the Labor Department on Friday. The average hourly earnings was up 3.2% year on year, against 3.3% expected. In addition, it is the second month in a row that the labor force participation rate fell slightly, to 62.8% in April, compared to 63% the previous month.
The greenback has thus failed to continue its momentum in recent days as it has largely benefited from remarks by the president of the US central bank Jerome Powell suggesting that it was not justified to lower rates soon.
Small downside, however, growth in activity in services in the United States further slowed in April to 55.5%, the lowest since the summer of 2017, according to the ISM index. Some still anticipate a slowdown in the economy in the coming months and, as a result, are betting on lowering interest rates to support growth.
However, the return to more than 200,000 job creations (per month) and the new fall in unemployment underpin the cautious position of the Fed, which kept the key rates at the same level on Wednesday.
Its chairman Jerome Powell also removed the outlook of an imminent decline in interest rates, saying the current weakness in inflation was the result of “temporary” factors, tripping Wall Street Wednesday and Thursday.