On the economic front, USA personal income increased 63 billion dollars, or 0.4 percent, in January, beating market consensus of 0.3 percent, said the Commerce Department on Wednesday.
The government's scorecard on how many new jobs in the USA were created in February may be anti-climatic: The Federal Reserve has already signaled it plans to raise interest rates in March.
Stocks were down slightly, and futures tied to rate-hike expectations moved little. "Fed Vice Chairman Stanley Fischer chimed in Friday in NY".
Overall, we believe that the growth momentum warrants the US Fed to normalise interest rates.
On Thursday, Fed Governor Jerome Powell told CNBC the case for a March rate increase has come together with domestic inflation nearing the Fed's 2 percent goal.
But economists said the Fed's more hawkish stance was unlikely to alter the RBA's own rates course anytime soon, despite mounting evidence that last year's rate cuts have sparked a re-acceleration of house prices and investment lending, particularly in Sydney and Melbourne.
The RBA has signalled it is keen to see the Fed embark on interest rate increases to help keep a lid on the stubbornly strong Australian dollar and to create space to start lifting its record low cash rate.
Waiting too long to raise rates could mean the Fed has to hike more rapidly at some point, which "could risk disrupting financial markets and pushing the economy into recession". "I think the advice that has been given by a large number of members of the Fed, of the FOMC [Federal Open Market Committee], is correct, and I strongly support it", Fischer continued.
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Many economists now say that barring an unexpectedly disastrous monthly jobs report next Friday, a Fed rate increase this month appears certain. On Thursday, for example, the government reported that first-time applications for unemployment benefits - a proxy for the pace of layoffs - fell last week to their lowest level in almost 44 years.
The Fed's rate increase also adds worries over a possible foreign capital flight from Korea to the United States by those seeking higher yields.
The Standard & Poor's 500 index fell 3 points, or 0.2 per cent, to 2,378.
The shift in expectations has sent Treasury yields soaring, since investors now see a prospect of higher inflation that would erode the real interest payouts of bonds.
The Fed has been careful to emphasize that any rate hikes will follow the progress of the economy.
In economic news, U.S. Final Services PMI came in as expected at 53.8. It jumped 0.9 per cent against South Korea's won, 0.2 per cent on the Indonesian rupiah and 0.8 per cent versus Australia's dollar.
However, Yellen said, "I now see no evidence that the Federal Reserve has fallen behind the curve".
She said that the process of removing accommodation likely will not be as slow as it was during the past couple of years, if the economy is not adversely affected by unanticipated developments.