Fed statement expectation dominates markets

Heading into the close the FTSE 100 is down ten points, as dealers cash in their positions before the Federal Reserve statement.

UK markets

Stocks have slipped into negative territory as we approach the end of the trading day. Traders are eagerly awaiting the announcement from the Fed, and the consensus is for the QE scheme to be kept at $85 billion per month. Equity markets have enjoyed a good run ever since the US government temporarily raised the debt ceiling nearly a fortnight ago. The political stalemate across the pond which led to a partial shutdown of US government has almost guaranteed that the Fed will maintain the status quo tonight.

US markets

The Dow is off by ten points, at 15,669, with traders taking their profits after a run of record highs. Today’s ADP employment data, like last week’s non-farm payrolls report, missed expectations. This cemented investors' opinion that the Fed will look towards the first quarter of 2014 before trimming the stimulus package. There remains an outside chance the Federal Reserve will have a more hawkish outlook, and if so we could see traders continue to lock in profits, as a string of all-time highs is the perfect excuse to take some cash out of the market.

Commodities

Precious metal traders are stocking up on gold and silver ahead of the Fed announcement, for fear the commodities will be more expensive post-statement. The markets are pricing in no change of policy from the US central bank.

FX

The US dollar has lost ground against most major currencies in the run up to the Fed's statement.

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