The US dollar rises today due to job vacancy data and stronger performance in the service sector.

The dollar index DXY rose during Tuesday's trading to erase some of its early losses from the session as well as some of the sharp losses incurred during the previous session, after the greenback received some support due to the rise in Treasury yields alongside stronger-than-expected economic data released today in the United States.

Dollar Now

On the trading front, the dollar index – which measures the performance of the U.S. currency against a basket of 6 other major currencies – increased by 0.14% to record 108.48 points, after dipping to a level of 107.848 points earlier in the session.

The recovery witnessed by the dollar during today’s session was driven by the rise in U.S. Treasury yields following stronger-than-expected job openings data for November and the Purchasing Managers' Index (PMI) report from the Institute for Supply Management (ISM) for the services sector in December.

The data released today showed an increase in available job openings in the U.S. in November by about 259,000 jobs to the highest level in six months at 8.098 million jobs, which exceeded expectations that pointed to a decline to 7.740 million jobs .

At the same time, the PMI from the Institute for Supply Management for the U.S. services sector rose by about 2.0 points in December, reaching 54.1 points, which also came in higher than expectations that forecasted a reading of just 53.5 points.

On the other hand, the U.S. trade deficit widened in November to $78.2 billion from $73.6 billion in October, but it was lower than market expectations of $78.3 billion.

The economic data that showed continued resilience in the labor market and strength in the services sector in the U.S. served to bolster the U.S. dollar, as markets are now discounting the likelihood of a 25 basis point rate cut at the Federal Open Market Committee meeting on January 28-29, with investor pricing for this possibility now at only 7% according to the Federal Reserve's interest rate monitoring tool FedWatch .