It now appears clear that the Fed can hold off on QE3 for the very near-term at least. It is also clear that there will be very large demand for euros at the February 29 auction of 3-year loans (LTRO) from the ECB.
The ECB’s balance sheet is already larger than the Fed’s in USD terms($3.5 trln versus $2.9 trln) and it will take the crown by a mile if the ECB auctions anywhere near the EUR 1 trln that has been rumored in recent sessions.
