SNB in Focus, Euro Shorts Were Ripe

With the ECB in the rearview mirror we look ahead of the repercussions elsewhere. In early-week trading, CAD is marginally softer alongside oil. Weekly CFTC positioning data showed euro shorts rising ahead of the ECB decision. It was likely a sleepless weekend at the SNB. The Swiss franc was the top performer last week and now the pressure is on to response to ECB measures.

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The SNB decision is on Thursday and some analysts have scaled back expectations for action because the ECB didn't deliver a euro-crippling package. Still, broader rise in the franc last week will concern the SNB. EUR/USD is trading at 1.08 when they were prefer to see it above 1.20. We will be keeping a close eye on headlines out of Switzerland in the lead-up to the decision.

On the weekend a Reuters report revealed that ECB hawks felt like Draghi was trying to corner them with his dovish tone last month. Instead of bowing, they dug in their heels and with the backing of staff forecasts that were little changed, Draghi didn't even table a seriously dovish proposal.

The euro opened the week flat at 1.0885 but the volatility is surely unfinished.

Commitments of Traders

EUR -182K vs -175K prior

JPY -75K vs -77K prior

GBP -28K vs -32K prior

AUD -47K vs -57K prior

CAD -39K vs -39K prior

NZD +5K vs +4K prior

This week's data showed the largest euro short position since May 5 as traders bet on Draghi delivering. Looking ahead, the dollar long position is high across the board and after the ECB surprise, speculators may be feeling a bit less comfortable ahead of the Fed, especially with US economic data slipping