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Fed inflation warning boosts the dollar
http://www.ft.com/cms/s/0/fa9d9350-9afc-11e0-a254-00144feabdc0.html#axzz1Q46sUBsk



The dollar rose and stocks fell after the US Federal Reserve said it would maintain the size of its balance sheet but became a bit more cautious about the pace of inflation.

Markets did not react too sharply to the Fed, similar to the non-reaction to the Greek government’s victory in a confidence vote. In both instances, they are only the first of many difficult steps required to ensure that Athens receives much-needed financial assistance, and for the US economy to not fall back toward recession.

But the trade-weighted dollar index and Treasury yields hit their highs of the US session during the press conference. The Fed lowered its economic growth outlook for the year, but also raised its inflation outlook and dropped language suggesting core inflation was “subdued”.

Ten-year Treasury rates are at 3 per cent, up from the day’s lows below 2.94 per cent, which was near their lowest level of the year. The dollar index is up 0.4 per cent.

Crude oil ignored the stronger dollar and rose once again, with Brent crude rising nearly $3 a barrel, suggesting that the Fed’s “temporary” inflation pressures were not yet easing.