United States second quarter growth estimate cut to 1.1%

United States second quarter growth estimate cut to 1.1%

The central bank boss also hinted a rate increase is on the cards in coming months, which weighed on US markets on Friday and dragged stocks in most of Asia and Europe lower on Monday.

On Friday, chairwoman Janet Yellen said the case for a near-term rate hike had improved in recent weeks and has stated her preference in the past for monetary normalisation due to ongoing fears that extended periods of loose policy could create unintended bubbles. Her statements strengthened what many other senior Fed officials had been saying in the days leading up to her speech at Jackson Hole.

"I believe the case for an increase in the federal funds rate has strengthened in recent months", Yellen said in her speech at a symposium in Jackson Hole, Wyoming, on Friday.

Fischer noted that Friday's employment report for August, as well as other data, will be a factor in the decision.

That was followed by a Fischer interview with CNBC in which he said that Yellen's view was consistent with two hikes this year, with the first as soon as September, depending on how economic data plays out.

Elsewhere, traders seemed less certain, with most world stock markets dipping as they tried to second-guess the Fed's timing of its next rate rise. Fisher had already mentioned that the Fed's preferred price benchmark minus food and energy cost is at 1.6%, which is "within hailing distance of 2 percent".

London, Europe's biggest stock market, was closed for a public holiday. The Nasdaq Composite was up 13.41 points, or 0.26 per cent, at 5,232.33. The financial sector of the S&P 500 has gained just 1.8 percent in 2016 versus a 6.7 percent increase for the broader index.

Treasury yields rose, to their highest since June, dragging German Bund yields higher.

The yield on Germany's benchmark 10-year bond rose more than 6 basis points to minus 0.025 percent - the highest level since June 24 when the result of Britain's European Union referendum sent shockwaves through markets. "The Fed remains very much data dependent, and that gives you the next hurdle for global markets which is the USA non-farm payrolls on Friday".

There is plenty of data due out this week to move the Yen, including the unemployment rate, industrial production figures, capital spending reports and the Nikkei manufacturing PMI.

Analysts said prices were also depressed by worries over the outcome of a meeting next month between OPEC and Russian Federation aimed at addressing a global supply glut.

Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognised Tehran's right to regain market share lost during worldwide sanctions that were only lifted in January.

Oil prices fell, with benchmark Brent crude falling below $49 a barrel, pressured by high output from Middle East OPEC members and as a stronger USA dollar weighed on commodities.

A stronger dollar added to the pressure on gold trading as it made the yellow metal more expensive for foreign buyers.

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