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Forex pairs in this Article » EUR/USD (London) - Uncertainty over US policy has continued to weigh on equity markets, with currencies trading in tight ranges.

On 18 September, the Fed surprised markets my maintaining its monthly asset purchase programme at USD85bn, rather than tapering by USD10-15bn as had been expected. The prospect of a continuation of ultra-loose US monetary policy sent global stock prices soaring, while currencies climbed on dollar selling.

It was originally thought that this delay would mean that any tapering of asset purchases would be held off until 2014. However, St Louis Federal Reserve president and FOMC voting member James Bullard muddied the waters in a television interview by suggesting that a small October taper could still be on the cards.

New York Fed President William Dudley added to speculation by saying that he "certainty wouldn't want to rule out" a reduction in the central bank's bond-buying programme later this year.

In terms of US fiscal policy, Congress seems to be once again heading towards a debt ceiling stand off. It is anticipated that the US Government will reach the existing ceiling mid-October and any talks to pass a continuing resolution and avoid a shutdown have struggled to make any headway.

EUR/USD is recovering from session lows at USD1.3465, trading at USD1.3486 – flat on the day so far.

The S&P stands at 1,697.44, down 0.25 percent so far.
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