In the aftermath of this weekend’s disappointing G-20 summit in Shanghai in which the much anticipated “grand Chinese devaluation” was not only not discussed, but any abrupt devaluation was taken off the table (if only for the time being), the market has shifted its attention to the next big policy event, which is the March 10 ECB announcement where much more easing is already priced in.

As we added following our G-20 summary, “the next big move in the market is now entirely in Mario Draghi’s hands” citing Citi’s Israel Englander, who said laid out the possible outcomes as follows:

The ECB is in focus. EZ is undershooting on growth and inflation, and ECB President Draghi has been impassioned on the need to provide more stimulus. If they lowball or grudgingly meet expectations, we could face another December 4 move because market participants will see it as the equivalent of a ‘last ease in the cycle announcement’, basically ECB throwing in the towel. If they move aggressively (and take measures beyond vanilla QE and 10bps on rates), they will catch market off guard and unwind the view that policymakers see themselves as powerless.

We think it will be the former, which brings to mind the warning we posted on December 2, when citing MarketNews we wrote that “Mario Draghi May “Under-Deliver” Tomorrow, MNI Warns”:

Draghi has been priming markets for action since October, saying the ECB will do what it must to raise inflation as quickly as possible, and investors are betting that the probability of a deposit-rate cut is 100 percent. Now, even with some officials voicing misgivings, his Governing Council may find that only a rate reduction combined with increased bond purchases and possibly as-yet unannounced tools will prove convincing enough.

The December 3 “shock” in which the ECB ended up doing almost nothing, and which unleashed the biggest EURUSD move higher since the announcement of QE1, while Bunds and and macro hedge funds P&Ls plunged, is still fresh in all traders’ minds.