Dollar jumps as traders absorb Fed update

The US dollar is stronger, Treasury prices weaker, while US and European equity benchmarks are firmer as investors absorb the Federal Reserve’s latest policy update. Sterling is up 42 pips to $1.6312 as voting gets under way in the referendum over whether Scotland will leave the UK. The pound’s overnight implied volatility gauge (see chart below), which over recent months has tended to trade between 4 and 8, has jumped to 30.8 as the poll outcome is too close to call. Industrial commodity prices are lower, reflecting concerns about ample supply and waning demand as China’s economic growth slows. US index futures show the S&P 500 climbing 5 points to 2006.5. The FTSE Eurofirst 300 is up 0.7 per cent and its Asia-Pacific peer is down 0.3 per cent as the two regions get their first chance to react to Wednesday’s Fed announcement. The US central bank left its main interest rate at record lows and reduced its monthly asset purchases by a further $10bn, to $15bn a month. The Fed repeated its pledge to keep interest rates low for a ‘considerable time’ but also hinted it could lift borrowing costs more quickly than expected in 2015 and 2016, according to ft.com