In an interview with Bloomberg TV, Fischer did not comment on the timing of the next Fed rate hike but said "we choose the pace on basis of data," and that U.S. "employment is very close to full employment."

Fed Chair Janet Yellen said on Friday she thought the case had grown stronger in recent months for an interest rate increase, remarks that Fischer later that day said were consistent with a view that the U.S. central bank might raise rates at its next policy meeting in September.

Asked about the dollar on Tuesday, Fischer said the currency's strength affected U.S. inflation and company profits but improvements in the labor market showed the economy had withstood this headwind.

The Fed has signaled since March it would lift rates twice this year, but investors have been skeptical.

Prices for Fed funds futures on Tuesday suggested they expect about a 20 percent chance of a hike next month and just over even odds for such a move in December <0#FF:> FFZ6. The Fed also has a policy meeting scheduled for early November.

The U.S. Labor Department's monthly employment report on Friday is expected to show the economy added 180,000 jobs in August, according to the median forecast in a Reuters poll.

(Reporting by Jason Lange; Editing by Bernadette Baum)