"Looking to the Fed futures market, there's less than a 50 percent chance of one more rate hike this year," said Bill Northey, chief investment officer at U.S. Bank Private Client Group in Helena, Montana.
Investors also await clues as to when the Fed will begin shrinking its $4.2 trillion bond portfolio.
"The September meeting is where we are anticipating the identification of the start date and we would not be surprised to see it start in an almost an immediate fashion," he said.
U.S. producer prices for July due on Thursday and consumer price index figures on Friday will give investors a clue about the extent to which the strengthening labour market is spilling over into inflation.
One of FOMC members - Bullard - said the Fed can leave interest rates where they are for now because inflation is not likely to rise much even if the U.S. job market continues to improve.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadzhiev
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