However, a stronger-than-expected rise in consumer prices in August triggered a more than 50 percent rise in the odds of a December rate hike, according to CME Group's FedWatch tool.
"We expect the MPC to follow through and deliver a 25-basis-point rate hike in November this year", Capital Economics economist Oliver Jones said in a note.
CPI rose 0.4 percent last month, and the index for the latest 12 months accelerated to 1.9 percent.
The Fed is expected to keep interest rates unchanged after its two-day meeting while many analysts have suggested it could announce plans to begin unwinding its Dollars 4.5 trillion balance sheet.
Meanwhile the focus of USD investors will of course be on the upcoming Fed rate decision this week, however the US Dollar could still see some movement overnight on Tuesday as the US releases it latest export price figures.
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Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY, said "the primary reason USA yields are creeping up is that thinking about it clearly, the market has decided that the Fed is unlikely to change the December 2017 dot - still saying they expect one more rate hike in 2017".
Fed funds futures are now pricing in a almost 61% chance of a 25-basis-point increase at the December meeting, putting the federal funds rate at 1.25% to 1.5%.
The central bank is expected to announce the start of a gradual reduction of the USD4.5 trillion balance sheet, which it amassed through purchases of US Treasury debts and mortgage-backed securities during the financial crisis. The US Secretary of State, Rex Tillerson, said that the US seeks for a peaceful resolution but if efforts fail to deter North Korea's nuclear actions, then the country will use its military options. MSCI's index of world stocks was last up 0.2 percent and hit an intraday record high of 487.07.
However, long-term yields in the US are not immune to the effect of low-yielding bonds in other developed countries like Germany and Japan. North Korea has advanced its nuclear program and conducted missile tests despite worldwide condemnation led by the U.S. On Sunday, Secretary of State Rex Tillerson said on CBS's "Face the Nation" that the U.S.is prepared to use military force if diplomatic efforts fail to end the nuclear standoff with North Korea.
The pound slipped to $1.3570 after it touched a one-year high of $1.3615 on Friday. -North Korea tensions and concern over the economic outlook reinforce the case for owning bullion, which has gained 14 percent this year. The euro rose to $1.2002 from $1.1997.
ENERGY: Benchmark U.S. crude fell 36 cents to $49.53 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, dropped 37 cents to $55.25 in London.