The U.S. central bank is a big talking point for investors this week, as Fed Chair Janet Yellen is set to give a speech on August 26 at the Federal Reserve Bank of Kansas City's annual Economic Policy Symposium at Jackson Hole, Wyoming.
Ahead of this, it is possible markets could show an element of caution, according to OANDA's senior market analyst, Craig Erlam, as traders await to see if the Fed provides any indications as to when it may raise interest rates.
"Investors are still not buying a 2016 rate hike, even following Stanley Fischer's comments over the weekend regarding the economy —markets now marginally pricing in February — so the probability that Yellen says something that goes against what's priced in seems quite high," said Erlam in a note.
"The only question is whether she'll strongly hint at a hike this year or indicate that holding off to early next year may be warranted, at which point markets would push the hike right back once again," he added.
Meanwhile the price of oil is keeping investors on their toes as crude futures continue to fall. WTI crude and Brent last stood around $47.00 per barrel and $48.75 respectively, with prices being dampened after Goldman Sachs warned that the price rally in August had been overdone.
On the data front, investors will be on the lookout for the New Home Sales data and Richmond Fed survey, both due out at 10.00 a.m. ET. Markit's Flash US Manufacturing PMI is also expected to be released in the morning.
In the previous session, U.S. stocks closed mostly lower.