Rising expectations that the Federal Reserve might feel compelled to raise rates sooner than markets had originally priced in saw a sharp selloff in US treasuries yesterday which in turn also helped weigh on US equity markets, which closed sharply lower with the S&P500 closing at its lowest level in over a fortnight. This weakness could well translate into a similarly weaker European open this morning. We also saw similar declines in European bond markets with Spanish yields jumping 11 basis points on the day, while French and German yields also jumped higher, which has helped support a rebound in the euro. The main focus of attention remains on the UK, and events in Scotland as Messrs Cameron, Clegg and Miliband, rush up to Scotland in a concerted political onslaught to help to arrest the momentum of the “Yes” campaign, and breathe new life into the “No” campaign. The reality is it may well be already too late and to a lot of voters in the rest of the UK their behaviour has all the unedifying hallmarks of a spurned boyfriend trying to woo back his aggrieved girlfriend, with pleas not to leave, while at the same time plucking promises for constitutional change out of thin air, in a bid to avert a potential break-up of the United Kingdom. This may not go down too well in the rest of the country, who are not exactly disinterested bystanders in all of this. As it is, we are already reading reports of capital flowing out of Scotland as uncertainty continues to rise, particularly, after comments from that other boyfriend, the unreliable one, Bank of England governor Mark Carney, that a currency union between the rest of the UK and an independent Scotland would be “incompatible with sovereignty”. The Bank of England governor may well be asked to reaffirm and clarify those remarks that he made at the TUC yesterday, at today’s inflation report hearings to the Treasury Select Committee, as well potentially outlining any contingencies the bank has in place in the event of a “Yes” vote next week. There is a concern though that this last minute political to-ing and fro-ing may be too little, too late, particularly since none of the Westminster politicians seems particularly popular in Scotland, and the fact that another poll released yesterday showed a similar shift to the “Yes” camp. It would appear that the key battleground will be among the undecided voters who account for 20% of the electorate, so there still remains a lot to play for. EURUSD – having put in a low at 1.2860 yesterday the euro has bounced back quite nicely suggesting that the market could be a little short. The 1.2785 level remains the key support in the longer term. To stabilise it needs to overcome resistance at the 1.3020 area to suggest a rebound towards 1.3110. The 1.2785 level is the 61.8% retracement of the up move from 1.2045 to 1.3995. GBPUSD – the pound remains under pressure but is starting to look very oversold after touching 1.6060 yesterday. The1.6000 level remains a crucial level given it is not only the 200 week MA but also the 50% pullback from the 1.4820/1.7190 up move. The pound needs to recover back through 1.6280 to eliminate this downside risk, and argue for a return to 1.6520. EURGBP – we continue to push against the 0.8040 level, which could well be double bottom resistance, but while below it the risk of a pull back towards the 0.7970 level a real possibility. A break above the 0.8040 level could well open up a move towards 0.8085 initially but also a move towards 0.8150. A move below 0.7970 argues for a move towards 0.7920. USDJPY – this week’s break above the 105.50/60 area is hugely significant and could well propel the US dollar towards 110.00. This scenario could only be undermined by a move back below 105.20. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.