Yellen Yellin’ On Capitol Hill, Dollar Slumps, Toshiba Turmoils, China PPI, German GDP: Enough Said

Ok, so there was actually quite a bit going on overnight, but needless to say, all anyone cares about is Janet Yellen’s visit to Capitol Hill.

The Fed Chair will appears before the Senate Banking Committee at 10 EST and the “will she” or “won’t she” debate over whether we’ll hear any kind of indication about rising odds of a March hike is dominating trader chatter.

If the dollar is any indication, the consensus seems to be Yellen will come across as overtly dovish or at least as “not hawkish” (although I’m not entirely sure what the distinction there is). There’s also some speculation that the resignation of Trump’s national security adviser Michael Flynn is weighing on the greenback.

“USD/JPY falls as much as 0.4% to 113.27 after Flynn resigns as National Security Adviser amid controversy over allegations of improper contact with Russian officials,” Bloomberg wrote a couple of hours ago, before conceding that Flynn has absolutely nothing to with anything. To wit: “dollar selloff on Flynn’s resignation may be limited as his role has little to do with the economy.” Right. 

Takuya Iwasaki, executive general manager of FX sales at Bank of America in Tokyo has a more plausible explanation. “USD/JPY is being weighed down as Japanese repatriate interest income from Treasuries, and by options strikes centering around 114 and 115,” Iwasaki contends. 

Well, whatever it is, it’s manifesting itself in a weaker dollar and that, in turn, weighed on the Nikkei which fell 1.1% % overnight. Toshiba’s kerfuffle probably didn’t help.

TOSHIBA FALLS AS MUCH AS 9.5% AFTER FAILING TO REPORT EARNINGS

toshibajpy2

 

Here’s SocGen’s take:

We went home with a risk-on bias and the dollar edging slowly up against both Euro and Yen. Toshiba then failed to publish results at Noon Tokyo time (delaying until March) and as Japanese equity prices fell, the yen bounced. The President Trump’s National Security Advisor Michael Flynn resigned amid allegations of improper contact with Russian officials. The dollar is down against almost every other major currency, with KRW, ZAR, TWD, RUB and AUD leading the way.

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