Two Big Questions, CAD Shorts Squeezed

 Two major questions loom in the week ahead: Will the ECB move toward cutting rates? Will the US spring back after a cold Winter? Early market moves pushed up EUR/USD and cable modestly higher. Japanese industrial production data is due at 2350 GMT.

The ECB decision is Thursday and the chance of action this week is low. Bloomberg surveyed 55 economists and only 3 expect any kind of move. A 10-15 cut in the refi rate with no negative deposit rate is the dovish scenario but it's also a move that would signal more to come.

If there is no move on rates, look for hints about what will come next. The ECB has maintained that low inflation is mainly due to structural adjustments in the periphery but that the main scenario is unfolding as expected. Others worry that disinflation could become entrenched in a Japanification of Europe.

On Friday, German HICP inflation was lower than expected at 0.9% versus the 1.0% consensus and that raised the chance of a move but comments from German officials on the weekend downplayed the chance of a move.

Throughout the week, the focus will be on the US economy as the Great Question of Winter 2014 is answered. Was it bad weather or something more?

This week, the first look at top-tier March data is released including the ISM and jobs surveys. Sentiment data has been solid and jobless claims numbers good so expectations are high. If the numbers are only slightly above expectations it might not be enough for markets.

Commitments of Traders Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

 EUR +40 vs +53K prior

 JPY -69K vs -62K prior

 GBP +30K vs +26K prior

 AUD -21K vs -24K prior

 CAD -33K vs -70K prior

 NZD +18K vs +16K prior

 CHF +15K vs +15K prior

 The big move in CAD positioning suggests the slump in USD/CAD last week might have been exaggerated by a squeeze on longs.