The dollar index weakened growth on Friday after hitting a new 20-year high, as traders weighed the recent sell-off in world markets caused by fears of a recession.

 

European stocks fell in the wake of the wall street crash.

 

The U.S. currency has strengthened on expectations that the Federal Reserve will tighten monetary policy faster than other countries to stem rapid inflation.

 

In April, 428,000 jobs were created in the U.S., which was slightly more than the 400,000 expected by the Dow Jones.

 

The dollar index, which tracks its performance against a basket of six major rivals, rose 0.5% in early European trading and hit a new 20-year high of 104.07.

 

However, it then lost ground in volatile trading and last fell 0.1% to 103.66. For a 1-week period, it has been growing for the fifth week in a row, an increase of 0.7%.

 

On Wednesday, the Fed raised rates by half a percentage point — the biggest jump in 22 years — but the dollar temporarily cooled on comments from Fed Chairman Jerome Powell that policymakers are not considering actively raising rates by 75 basis points in the future.

 

"Financial market conditions need to become tougher to change the central bank's view of inflation risks, so the U.S. dollar will remain on the path to strengthening for now," MUFG said in a note.

 

At the beginning of European trading, the euro lost to 0.5% against the dollar, but then changed course. The last time it changed slightly at $1.0545.

 

Sterling was trading at $1.2337 after earlier falling below $1.23 for the first time in almost two years, a day after the Bank of England issued a sharp warning that britain risked a double whammy of recession and inflation above 10%.

 

The Bank of England also joined the Fed in raising rates, raising them by a quarter of a percentage point to 1%.

 

The yen rose slightly against the dollar, 0.4% to 130.58 yen to the dollar.