FOREX TODAY: FOCUSING ON CANADIAN INFLATION STATISTICS AND BOE GOVERNOR BAILEY'S TESTIMONY

WHAT YOU SHOULD BE AWARE OF ON TUESDAY, FEBRUARY 20 IS AS FOLLOWS:

The financial markets are still largely calm after the muted trading on Monday. During European trade hours, UK Treasury Select Committee will hear testimony on monetary policy from officials, including Bank of England (BoE) Governor Andrew Bailey. Statistics Canada will make available the January Consumer Price Index (CPI) statistics later in the day.

CANADA CPI PREVIEW: ACCORDING TO PROJECTIONS FROM SEVEN MAJOR BANKS, JANUARY'S INFLATION WAS PROBABLY LOWER.

After a long weekend, the US stock and bond markets are back in action. The yield on the benchmark 10-year US Treasury note remains stable at approximately 4.3%, but futures for the US stock index are trading lower in the European morning. The US Dollar (USD) Index, on the other hand, is holding onto slight daily gains above 104.00 after ending the first day of the week essentially unchanged.

US DOLLAR EXCHANGE RATE FOR THIS WEEK

The US dollar's (USD) percentage movement compared to a list of major currencies for this week is displayed in the table below. The US dollar outperformed the Swiss franc in terms of strength.

The major currencies' percentage movements relative to one another are displayed on the heat map. The quotation currency is selected from the top row, and the base currency is selected from the left column. For example, the percentage change shown in the box will indicate EUR (base)/JPY (quote) if you select the Euro from the left column and proceed along the horizontal line to the Japanese Yen.

The People's Bank of China (PBoC) declared during Asian trade hours that the five-year LPR will be reduced by 25 basis points (bps), from 4.20% to 3.95%, while the one-year LPR would remain unchanged. The Hang Seng and Shanghai Composite indexes were last seen closing the day slightly higher.

Early on Tuesday, the USD/CAD pair is still moving in a narrow channel around about 1.3500. The pair closed the previous week at 1.3600, its best level since December, but it lost much of its gains, closing the week with modest gains just below 1.3500.

CANADA CPI PREVIEW: A SLOWER 3.3% ANNUAL RATE OF INCREASE IN INFLATION IS ANTICIPATED IN JANUARY.

On Tuesday, Japanese Finance Minister Shunichi Suzuki made a few moderate verbal remarks, restating their close observation of the foreign exchange market's movements and their strong sense of urgency. In a related statement, Atsushi Mimura of the Japanese Finance Ministry stated that the government “is always communicating and coordinating with other countries in case for an FX intervention.” In response to these remarks, the USD/JPY trades above 150.00 in positive territory.

Following a flat start to the week, GBP/USD experienced mild negative pressure and dropped below 1.2600 on Tuesday during Asian trading hours.

On Monday, the EUR/USD pair was unable to settle into a pattern and oscillated within a small range below 1.0800. The pair continues its lateral movement above 1.0750 early on Tuesday.

After the bounce on Friday, Gold kept moving higher and ended the week in the green on Monday. Early on Tuesday, XAU/USD maintains its position and is trading at about $2,020.