Asian currencies showed volatility on Tuesday with the Aussie rebounding smartly and the yen giving up overnight gains in a thin regional data day with a background of U.S. rate expectations setting the tone. AUD/USD traded at 0.7192, up 0.50%, while USD/JPY changed hands at 119.31, up 0.76%. EUR/USD was quoted at 1.1555, down 0.55%. In a speech in the U.S. late on Monday, Atlanta Federal Reserve Bank President Dennis Lockhart said he expects the Fed to start raising interest rates sometime before year’s end and to do so gradually. Lockhart, who not long ago said he expected the Fed’s rate-setting the Federal Open Market Committee to raise the federal funds rate from near zero at its Sept. 16-17 meeting, did not repeat that prediction, but neither did he clearly indicate any considerable delay of “liftoff.” He did not directly address recent tumult in global financial markets, which saw the Dow Jones Industrial Average plummet well over 1000 points at one stage earlier Monday, but did say various “headwinds and shocks” are “complicating the economic outlook in remarks prepared for delivery at a Public Pension Funding Forum in Berkeley, California. “I think there is a high bar right now to not acting, speaking for myself,” he said. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.32% to 93.70. Overnight, the dollar tumbled over 1% against the other major currencies on Monday, to hit an eight-month low amid a broad based selloff in global equity and commodity markets as mounting fears over a slowdown in China fuelled widespread risk aversion. Wall Street opened sharply lower on Monday, after Chinese shares tumbled more than 8% overnight. The decline came as Beijing held back from implementing fresh measures to support Chinese equities after markets fell 11% last week. Financial markets have been roiled since China devalued the yuan on August 11,exacerbating fears over a China-led slowdown in the global economy. The dollar has come under pressure as mounting uncertainty over the global growth outlook and the subdued U.S. inflation outlook has prompted investors to scale back expectations for an initial rate hike by the Federal Reserve.