US housing starts rose by a sharper than expected 10.5pct in August to a four-month high. Despite the rise housing starts are still 12pct below the levels seen in April, when activity was being boosted by the homebuyer tax credit.

The US Fed has repeated its pledge to keep interest rates exceptionally low for an extended period. The Fed did not come out with a further quantitative easing policy, but did say that it will be prepared to provide additional stimulus if required to support the economic recovery. US ICSC chain store sales fell 1.4pct last week. Despite the weekly fall ICSC Research expects comparable store sales to increase about 3pct in September.

European shares eased on Tuesday, with investors cautious ahead of the Federal Reserve monetary policy meeting. Gains in construction stocks following the better than expected housing data limited losses. The FTSEurofirst index fell by 0.3pct with the UK FTSE down by 0.5pct and the German Dax lower by 0.3pct.

US sharemarkets closed mixed on Tuesday after the Federal Reserve suggested it is prepared to help the economy with further stimulus if needed. Airline stocks received a boost after the IATA forecast that airline industry would make a combined net profit of US$8.9 billion - more than three times the previous forecast. The CBOE Volatility index rose 4pct. The Dow Jones rose by 7pts or 0.1pct with the S&P 500 down 0.3pct and the Nasdaq eased by 6pts or 0.3pct.

US treasuries rallied on Tuesday (yields lower) after commentary by the Federal Reserve signalled it was open to more quantitative easing if required. US 2yr yields fell by 5pts to 0.42pct and US 10yr yields fell by 12pts to near 2.58pct.

The greenback sold off against a basket of currencies on Tuesday, following the US Fed commitment to add further stimulus if required. The Euro rallied from lows near US$1.3065 to US$1.3255, ending US trade near US$1.3245. The Aussie dollar rallied from lows near US94.30c to US95.65c, closing US trade near US94.45. The Japanese yen held between 85.60 yen per US dollar and JPY85.05, ending US trade near JPY85.10.

US crude oil prices fell fifth time in the past six sessions on Tuesday. The sluggish economic recovery that was highlighted in the Fed statement weighed on prices. The Nymex crude oil contract fell by US$1.34 or 1.8pct to US$73.52. London Brent crude fell US90 cents to US$78.42 a barrel.

Base metal prices were weaker on the London Metal Exchange on Tuesday. Nickel lost 3.2pct while the other metals lost between 0.5-1.8pct as traders awaited on the Fed statement. And the Comex gold price fell by US$6.50 an ounce to $1274.30. However in after hours trade the gold price spiked to record highs after the slide in the US dollar - currently trading at US$1290.40 an ounce.

Ahead: In Australia and the US, no economic data is released. Euro zone industrial orders is slated for released.