The US dollar continued its growth against the euro and a number of other world currencies on Friday after the release of a good report on the US labor market. Although did not justify the economists' forecasts, it pointed to a good state of the employment market.
The comments of the representatives of the Fed also reflected the market rather positively.
According to the report of the US Department of Labor, the US economy continued to create new jobs at a fairly good pace. Thus, the number of new jobs outside of US agriculture in April 2018 was 164,000, which exceeded the March report, but slightly missed the forecasts of economists.
It is important to note that the unemployment rate in the US fell to 3.9% against 4.1% a month earlier. Economists predicted that in April, 175,000 jobs will be created and the unemployment rate will drop to 4%.
An important point is also the fact that, despite the growth of new jobs, the growth of wages still remained slow, which will negatively affect the prospects for increasing inflation in the US in the near future. The average hourly earnings rose only 4 cents, and in comparison with the same period of the previous year, it only grew by 2.6%.
In general, the report can be considered positive, as the growth of the labor market and the reduction of unemployment are a positive signal of the Fed in the direction of a further increase in interest rates.
As noted above, speeches by the representatives of the Federal Reserve were in support for the US dollar.
William Dudley, for example, said he expects investment to increase after the adoption of the new tax reform, which will keep the prospects for the economy in the next few years in fairly good shape. The president of the Federal Reserve Bank of New York also noted a pretty good April job growth, adding that he was pleased with the progress in returning inflation to the target level.
FRB President San Francisco Williams, in an interview with CNBC, expressed concern about the growth of wages, which is still quite restrained. This will negatively affect the growth of inflation in the future. Williams also noted that job growth is consistent with other recent indicators, which could lead to a drop in the unemployment rate to 3.5% in the following years.
As for interest rates, the representative of the Federal Reserve discussed about the possibility of raising short-term interest rates in the near future.