The CY3654 emulator has some selftest code already programmed into it. If you do not download your own HEX file then the emulator will default to the selftest code.
The selftest code is what Cypress refers to as the "logo" code. It is basically mouse firmware that moves the cursor really fast spelling "USB" (most of the time it doesn't look like it spells USB though). As a mouse this code will enumerate as a standard HID device and you can view it as such in the device manager.
To stop the mouse movement, unplug the USB cable. Then try downloading your HEX file again.