NEW YORK: The dollar extended its gains against a basket of currencies on Thursday, a day after the US Federal Reserve surprised markets by signalling it would raise interest rates and end emergency bond-buying sooner than expected.

Fed officials on Wednesday projected an accelerated timetable for rate increases, began talks on how to end emergency bond-buying, and said that the Covid-19 pandemic was no longer a core constraint on US commerce.

The dollar index, which tracks the greenback against six major currencies, was up 0.38% at 91.75, its highest since mid April. That rise follows a nearly 1% jump on Wednesday, the largest daily percentage gain since March 2020.

With equity markets hurting, the Australian dollar - seen as a proxy for risk appetite - was down 0.54% at 0.7568, its lowest since April 1.

The stronger dollar sent sterling below $1.40 to a fresh 5-week low.

Elsewhere, bitcoin was trading at $38,824.41, little changed on the day.