The US dollar edged higher today after an employment indicator substantially beat expectations, fuelling speculation that the Federal Reserve could hike interest rates at its September meeting.
Job openings in June as measured by the JOLTS gauge climbed to a record 6.2 million versus forecasts for 5.6 million. This was also well ahead of the 5.7 million JOLTS reading registered in the prior month.
The US dollar index, which measures the dollar against a basket of currencies, was up by around 0.3%.
Higher-than-forecast JOLTS closely follows the strong US non-farm payrolls report released last week that showed 209,000 jobs were created in July versus expectations of 183,000.
US unemployment also dipped to 4.3% versus 4.4% in June, with the jobless rate now at its lowest point since 2001.
Last week, Goldman Sachs economists forecast that US unemployment could drop to as low as 3.8% next year.
The Federal Reserve (Fed) has already hiked interest rates twice this year, in March and June, taking the Fed funds rate to 1.25%.
While the Fed expects to make one further 0.25% rate increase before the end of the year, recent weakness in inflation data has presented a dilemma.
Despite the undeniable strength in the labour market, inflation has surprised on the downside of late with consumer prices easing to an annual rate of 1.6% in June compared with 1.9% in May.
Lower fuel prices, as crude continues to flag, have put a dampener on inflation. However, wage growth remains highly constrained given the apparent tightness in the labour market. Hourly wages for July rose by just 2.5% from the year-ago period.
All eyes will be on the next US inflation report, which is being released this Friday. Any sizeable pickup in inflation could be bullish for the dollar, as this would make a near-term interest rate hike from the Fed appear more likely.
Year-to-date, the US dollar has lost significant ground against the euro and the yen, with political uncertainty surrounding the Trump administration making investors relatively cautious on the greenback.