Fears about the outlook of the Chinese and global economy as well as the impact from further Fed tightening triggered a violent reaction in the FX markets at the start of the year. Since then, however, the Fed has turned more dovish and that has helped prop up market risk sentiment while sending USD tumbling. Going into the semi-annual testimony of Fed Chair Yellen next week investors seem to expect an extension of the cautious rhetoric. In addition, the Lunar New Year festivities should keep Chinese markets quiet and the country’s data calendar fairly light. All that should, in theory, create a favourable backdrop ... (full story)