Still, normalisation may not be the easiest path for central bankers, with fragile economies, inflation not taking off as expected and the potential for roiling the financial markets with sudden changes.
When the Fed said on Thursday that Yellen next week would use a keynote speech at Jackson Hole to address "financial stability", it was a clue to some that she may agree. The Australian dollar increased to 0.7938 USA dollar from 0.7937 US dollar.
As per the latest commitment of traders (or COT) report released on August 18 by the Chicago Futures Trading Commission (or CFTC), large speculators and traders have reduced their bearish positions on the U.S. dollar for the first time in eight weeks. "If she wants to implement this in October, she could announce it in September", said Kathy Bostjancic, head of United States macro investor services at Oxford Economics. Investors are awaiting speeches from both Fed chair Janet Yellen and Mario Draghi.
Mr Draghi himself, in 2014, grabbed most attention when he indicated that the European Central Bank was also set to launch a full-blown programme of QE. Still, the index is up 13.5 percent since the election. Bond prices move in the opposite direction of yields.
But the central issue at the conference will be the lack of any classical reaction to rising employment and solid economic growth - inflation remains low and wages growth weak in many developed economics, such as Australia.
The dollar index last stood at 93.101 .dxy , having retreated from a three-week high of 94.145 set last Wednesday.
AIADMK factions' merge after 6 months; OPS-EPS seal deal with handshake
Panneerselvam should be the party chief", said an AIADMK veteran, who participated in the marathon meeting on Friday evening. Party sources said Sunday that the merger would be formalised on August 21 , considered auspicious on account of "Amavasya".
In Europe, London's FTSE 100 was up 0.7 percent to 7,370 while Germany's DAX rose 0.7 percent, too, to 12,155.
Coming under pressure, DGCX's pound-US dollar contract was trading 2.6 per cent lower in August.
On currency markets, Turkey's lira and South Africa's rand fell sharply, not only against a broadly stronger euro but also the dollar.
ANALYST TAKE: "The general feel is that recent events (softer inflation and softer sentiment in markets) will ensure that both the Fed and the ECB will tread carefully", said Jim Reid, a strategist at Deutsche Bank.
Meanwhile, the euro fell against the dollar yesterday, giving back most of its overnight gains as gains by the dollar prompted investors to square positions before a central bank conference this week.
"I would not be surprised to see Chair Yellen outline a similar argument at Jackson Hole -namely, that financial conditions are a piece of the puzzle that now support maintaining a gradual pace of tightening", analysts from NatWest Markets Strategy wrote in a morning note.
But even then overall emerging borrowers' euro debt is dwarfed by the $1.7 trillion they owe in dollars.