Fed Chair Janet Yellen said the case for a rate increase was strengthening, but provided little detail on when the central bank would next move.
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Also, bonds prices rebounded on upswing in investor demand, following a market selloff on Friday after the US Federal Reserve Chair Janet Yellen commented that the case for interest rate increase has strengthened in the coming months.
Asked about the dollar on Tuesday, Fischer said the currency’s strength affected US inflation and company profits but improvements in the labor market showed the economy had withstood this headwind.
Federal Reserve Vice Chairman Stanley Fischer said Tuesday the USA job market is “very close to full employment” and that an interest rate hike – or a series of them – would be made based on economic signs.
HONG KONG-Japanese stocks rallied on a weaker yen but other Asian markets retreated Monday after Federal Reserve chief Janet Yellen hinted at a United States interest rate rise by the end of the year. Currently, the Fed Funds indicator is predicting a 30 percent chance of a rate hike in September, up from 18 percent before Yellen’s speech on Friday. Spot gold was down 0.3% at $1,318.77 an ounce at 2.00pm GMT, while U.S. gold futures for December delivery were down $6.10 an ounce at $1,321.10. The London Stock Exchange was closed for a summer bank holiday. Earlier in the session, the index rose as high as 95.608, its loftiest since August 16.
The euro edged down 0.1 percent to $1.1191.
The dollar has responded with vigor and was last trading at the highest mark since August 11 at 95.76 on the dollar index.
The implied probability that the U.S. Fed will hike interest rates in September had fallen back to 36 percent.
Movers: Shares of Alstom SA (ALO.FR) gained 2.3% after the French infrastructure company late Friday said it signed a EUR1.8 billion deal to design and build 28 new high-speed trains for US rail operator Amtrak.
He said attention may now be focused on key jobs data, due to be released Friday, “which if it exceeds expectations could provide another compelling reason for the Fed to act”.
The S&P 500.SPX was up 12.28 points, or 0.57 percent, at 2,181.32.
Oil prices settled down more than 1 percent, ending two consecutive days of gains, pressured by high output from Middle East OPEC members and as a firmer USA dollar weighed on commodities.
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Fischer, who said that the data could weigh on any rates decision, gave no fresh clues on timing in a television interview on Tuesday.
