U.S. Federal Reserve's Jackson Hole meeting scheduled this week could produce some hints about the timing of a further interest rate hike. The Jackson Hole event has previously been a platform for the Federal Reserve to provide more clarity to the markets and warn about upcoming policy changes.

Federal Reserve Chair person Janet Yellen will speak at the annual mountain retreat meeting of central bankers on Friday, and markets will be watching closely for comments on the U.S. economy. Yellen has a great opportunity this Friday to send a clear and concise message to investors.

Vice Chairman Stanley Fischer in a speech 21 August added to the chorus of Fed officials (Presidents Dudley and Williams) who have started laying the groundwork for a September rate hike. Fischer said that he thinks the Fed are close to achieving their employment and inflation targets and emphasized the US labour market’s proven resilience to external shocks. Yellen’s speech on Friday has the potential to confirm that hawkishness.

Given the Fed Funds futures implied probability is still only 51 percent for a hike by December this year, that should arguably give a lift to the battered USD if so, and that does seem a likely outcome this week.

FOMC officials continue to remain hawkish over the prospects of a near-term rate hike, keeping a broad based recovery in USD intact. Hawkish comments have pushed treasury yields across the curve higher, especially the short term ones. U.S. 2-year treasury yield is up more than 4 percent today and trading at 0.78 percent. U.S. 10-year yield is up 1.2 percent. The U.S. dollar index is up 0.3 percent, trading at 94.88. US dollar index (DXY) extends gains for a second straight session, hits high of 94.96 on the day.