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On Wednesday, November 3, , the FOMC is expected to announce a second round of asset purchases (QE2) to support the US economic recovery. We think there is a nontrivial risk that the Fed will disappoint and withhold announcing QE2 after next week's meeting, either because they're unable to forge a consensus or they prefer to wait for a more compelling deterioration in economic conditions. If they do announce QE2, we think it will be smaller than the market is expecting, around $500 b over six months, potentially setting the stage for a USD recovery. Should the Fed opt for asset purchases of $1 trillion or more, we should expect the USD to make new lows, with gold and silver potentially gaining sharply.