This means it will be some time before rates rise to the extent that they warrant lower equity valuations and is helping support stocks in the current trading range.
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The dollar index .dxy continued to trade at a more than two-week high on higher prospects of a rate increase.
Analysts said it is possible for the Fed to hike interest rates as soon as September. But both Fed Chair Janet Yellen and Vice Chair Stanley Fischer suggested on Friday the case for a rate increase was strengthening, and Fischer was due to speak later yesterday.
The dollar index, which measures the greenback against six major currencies, was up 0.56 per cent at 95.116 in late trading, the highest level in three weeks.
GBP/USD is supported in the range of 1.3018 now trading at 1.3075 levels.
The Confederation of British Industry said investment plans among services firms, the largest sector of the British economy, were at their lowest in more than four years. Data on Tuesday showed US consumer sentiment rose to 101.1 in August, handily beating expectations for a reading of 97.0. However, the central bank has maintained that any increase would be gradual.
In late NY trading on Tuesday, the euro fell to $1.1137 from $1.1190 of the previous session, and the British pound decreased to $1.3078 from $1.3114, Xinhua news agency reported. Utilities led the charge lower with a 1% decline.
USA stocks declined at the close on Tuesday as oil prices dropped and as traders awaited the all-important non-farm payrolls report. Other data showed that house price growth moderated in June but still remaining strong.
AUD/USD is supported around 0.7490 levels and now trading at 0.7508 levels. The S&P 500 index finished up 0.5% Monday, while the Dow industrials ended 0.6% higher.
Shares of Signet Jewelers Ltd.(SIG) declined 0.3% after it was downgraded to neutral from overweight, with a price target cut to $90 at J.P. Morgan Chase & Co.
On the economic front, the Conference Board Consumer Confidence Index came in at 101.1 in August, up from 96.7 in July.
Strong economic data in the past few months and narrowing concern about global economic risks have encouraged the Fed to turn more hawkish on rates. The Aussie has been on a downtrend since hitting a near 3-1/2 month high of $0.7760 earlier in August.
Mounting expectations for a Fed hike this year boosted financial stocks on both sides of the Atlantic, limiting losses in USA shares and helping the pan-European STOXX 600 hit its highest level since mid-August.
Shares of Apple Inc.(AAPL) were in the spotlight after European Union antitrust officials ordered the Irish government to recover (http://www.marketwatch.com/story/apple-benefited-from-145-billion-illegal-tax-break-eu-rules-2016-08-30) as much as 13 billion euros ($14.5 billion) in taxes from the Cupertino, Calif. -based iPhone maker.
According to Fischer, US “employment is very close to full employment”.
Gold fell to a six-week low on Tuesday after Federal Reserve officials sounded a hawkish note on interest rates, boosting the dollar, while attention turned to USA payrolls data this week for further clues on the pace of rate hikes.
Spot gold was down 0.8 percent at $1,312.71 an ounce by 2:49 p.m. EDT (1849 GMT), after falling as low as $1,311.65, the lowest since July 21. U.S. gold futures for December delivery settled down 0.8 percent at $US1,316.5 per ounce.
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Oil prices fell Tuesday, with Brent losing almost 2 percent, as the dollar rallied and glut worries grew amid forecasts for higher USA crude stockpiles and Iran’s remark that it was on target to reach peak production. USA crude settled down 63 U.S. cents, or 1.34 per cent, at $US46.35 per barrel.
