Case to raise rates in USA getting stronger - FED chair

Expectations of higher interest rates typically boost the dollar by making it more attractive to yield, seeking investors.

U.S. stock markets, which opened slightly higher, added to gains, with the S&P 500 trading up 0.4 percent shortly after the text of her speech was released.

U.S. stocks were trading higher after the comments, with the Dow Jones Industrial Average up 0.6 percent about 15 minutes after Ms. Yellen started speaking.

The FTSE 100 also made gains, hitting session highs before hovering about 0.5% higher, or 35 points to 6852 points.

At a gathering of central bankers from around the world in Jackson Hole, Wyoming, Yellen said improvements in the US labor market and expectations for moderate economic growth have boosted the case for a rate rise, supporting what the rate futures market has been pricing in for some time.

Analysts said it's possible for the Fed to hike interest rates as soon as September. Since investors earn very little interest on safe investments like USA treasury bonds, the Fed's policy may have caused investors to take more aggressive risks.

"When we see progress toward 2 per cent inflation and a tightening in the labor market and growth strong enough to support all that, we should take the opportunity", Powell said.

"Anything that's not going to be straight-out dovish is going to be disappointing", she said. Some say Yellen gave enough hints about a rate hike without showing all her cards on Friday. "That is very anemic".

That report showed US growth in the second quarter was slightly lower than previously thought, rising at a 1.1 percent annual rate. It has been the slowest recovery since World War II and followed the worst downturn since the 1930s. Before Yellen spoke, there was a 30 percent probability of a September move. After trading closed, Icahn said the reports were wrong and, in fact, he has bought more shares.

Stock in software company Autodesk, Inc. soared 8 percent Friday after beating investors' expectations in its quarter two earnings and Autodesk raised its outlook. That would be the fourth quarter in a row of drops.

The Dow Jones industrial average fell 47 points, or 0.2 percent, to 18,404.

The October crude contract rose 31 cents at US$47.64 per barrel.

London Metals Exchange's three-month copper, aluminium and tin ebbed, but zinc rose.

Elsewhere in commodities, the December gold contract advanced US$1.30 to US$1,325.90 an ounce, October natural gas went up 2.8 cents to US$2.91 per mmBTU and September copper contracts remained relatively unchanged.

  • Zachary Reyes