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

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.

Meanwhile, we got CPI data out of China which seems to support the global reflation narrative (consumer prices +2.5% Y/Y versus consensus +2.4%). Indeed, factory gate prices jumped 6.9% Y/Y, beating estimates handily.

(Bloomberg)

That would seem to argue for further tightening from the PBoC (which, you’ll note, is engaged in the same balancing act it’s been engaged in for years, as evidenced by this month’s repo rate hike counterbalanced with the restart of liquidity ops this week) and it also helps to explain this:

CHINA JAN. NEW YUAN LOANS 2,030.0B YUAN; EST. 2,440.0B

In Europe, German GDP and ZEW prints came in softer than expected:

• German Economy Expands 0.4% Q/q in 4Q; Est. Expands 0.5% Q/q
• German Feb. ZEW Expectations +10.4; Est. +15

(Bloomberg)

“The data are alright — German growth is solid, and impulses came exactly from where we expected them to do,” Marco Wagner, an economist at Commerzbank AG in Frankfurt told Bloomberg.

Once again though, it’s all eyes on Yellen today. The rest of it is just a sideshow. Here’s a summary of Asian market action:

• Nikkei down 1.1% to 19,238.98
• Topix down 1% to 1,539.12
• Hang Seng Index down 0.03% to 23,703.01
• Shanghai Composite up 0.03% to 3,217.93
• Sensex down 0.03% to 28,342.16
• Australia S&P/ASX 200 down 0.09% to 5,755.24
• Kospi down 0.2% to 2,074.57

European stocks are largely mixed. It’s worth noting that Credit Suisse reported earnings and announced plans to cut some 6,500 jobs this year. Generally speaking, the bank’s Q4 results were well received: