The US stockmarket gained after uninspiring US economic data left expectations for continued QE this year and into early next year intact.
The S&P 500's strong run continued, with a 0.5% increase and a new record high.
The Dow rose 0.7% and the Nasdaq gained 0.3% for the session.
US bonds edged higher at the long end (yields fell slightly) with sluggish economic data supporting expectations that QE tapering is still some way off.
The move was limited however, as investors continue to await the end of the Fed's FOMC meeting (early tomorrow morning AEDT), for any clues on the likely timing of QE tapering.
The Fed is widely expected to maintain its monetary stimulus.
Australian three-year government bond yields (implied by futures) traded in a narrow range of 2.98% to 3.00% at a one-month low.
The ten-year yield slipped from 3.95% to 3.93%.
The Aussie dollar extended its recent slide, falling to a two-week low of 94.72 US cents after RBA Governor Stevens said "it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today".
The Aussie dollar also lost ground against the other major currencies.
The US dollar was broadly stronger, as investors adjusted positions ahead of the Fed meeting, after weeks of US dollar selling amid expectations the Fed will continue with QE into next year.
The Euro gained ground earlier in the session on weak US economic data and ECB's Nowotny downplaying the chance of another rate cut in the Euro zone.
The Euro retraced those gains later to finish weaker versus the US dollar, although the Euro held onto its gains against the Aussie dollar.
The gold price slipped from a five-week high on the stronger US dollar and nervousness ahead of the Fed's policy decision. The oil price softened on hopes of a resumption of Libyan oil exports.
At a speech delivered yesterday morning, RBA Governor Glenn Stevens reiterated his view that, despite some recent strength, in due course the AUD is likely to move lower given Australia's cost structure, productivity levels and likely movements in our terms of trade.
His comments saw the AUD weaken through the day. He noted that US 'tapering' should eventually end and that markets have already witnessed what is likely to happen when that occurs i.e. higher bond yields and a lower AUD.
Japan's jobless rate edged lower from 4.1% in August to 4.0% in September.
The ratio of jobs to applicants also improved marginally from 0.95 to 0.96.
Retail spending in Japan is on the rise. Sales rose 1.8% in the month of September to be up 3.1% over the year. It appears as if Japan's monetary stimulus is gaining traction.
Consumer confidence was weaker than expected in October, falling to a seven-month low of 71.2, from an upwardly revised reading of 80.2 in September (previously reported as 79.7).
This was the largest decline in the Conference Board's measure of confidence since August 2011 when the US faced its previous budget impasse and debt-ceiling negotiations.
Producer prices were softer than expected falling 0.1% in September driven by a decline in food prices.
Core producer prices, which exclude food and energy prices, rose 0.1% in September.
For the year to September, producer prices remain subdued, rising 0.3%, down from 1.4% in the year to August.
Core producer prices rose 1.2% in the year to September, indicating pipeline inflation remains contained.
Retail sales fell 0.1% in September, after rising 0.2% in August.
Excluding auto sales, retail sales gained 0.4% in September, in line with consensus expectations, with US consumers spending money ahead of the October government shutdown.
Case-Shiller house prices were stronger than expected, rising 0.9% in August, taking the annual rate up to 12.8% in the year to August, from 12.3% in the year to July.
The annual rate in August was the highest since February 2006, reflecting increased demand as the housing market recovers.
Business inventories rose 0.3% in August, in line with consensus expectations.
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