The Fed’s preferred gauge of inflation has remained under its 2 percent target since April 2012 and rose 0.3 percent in the year through July.

The dollar index, which measures the greenback against six major peers, was up 1.11 percent at 95.916 in late trading.

“But more importantly, a near-term rate hike would definitely be a surprise to the financial markets and trigger increased volatility – something that influenced the Fed’s decision to delay any rate move this month”, he said.

As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment. “The perception in the market is that the dollar will appreciate against the euro in the coming months with US Federal Reserve members indicating in the past few days that they will hike interest rates before the year is out”.

“Volatility remains in check and probably will continue until at least the Federal Open Market Committee meeting in October“. Yellen is facing growing pressure from her colleagues and global investors to clarify where the Fed is heading and how it is making its decisions.

In Europe, ECB chief economist Peter Praet reiterated the bank’s readiness to modify its trillion-euro bond-buying programme should economic turbulence merit action, according to an interview in a Swiss newspaper.

The intervening wild swings in the stock market were the difference, Lockhart explained Monday.

The report, quoting HSBC Holdings Plc, said that a U.S. rate hike could accelerate declines in developing Asian currencies and in the process raise funding costs for firms and consumers, constraining demand and disrupting growth.

Investors will be watching a Chinese gauge of manufacturing tomorrow to assess the strength of the world’s second-biggest economy, which has been weighing on the global outlook in recent weeks.

China’s slowdown is already increasingly weighing on the economies of its Asian neighbors.

The United States dollar climbed to a two-week high after Federal Reserve officials made the case for an interest-rate increase this year, adding to the relative allure of debt denominated in the USA currency.

Crude oil <strong>prices</<strong>strong> fell sharply as speculators took profits <strong>ahead</<strong>strong> of the week-end and after a strong, nearly 6% gain on Wednesday, following an unexpected drawdown in inventories. Spot gold was little changed at $1,133.01 an ounce by 0328 GMT, after a 0.5 percent drop on Monday.

Brent crude, the global benchmark, was down 79 cents a barrel at US$48.13.