Forex Today: Eyes on BoE Governor Bailey testimony, Canadian inflation data

Here is what you need to know on Tuesday, February 20:

Financial markets remain relatively quiet following Monday's subdued action. Bank of England (BoE) Governor Andrew Bailey and other policymakers will testify on monetary policy before the UK Treasury Select Committee during the European trading hours. Later in the day, Statistics Canada will release Consumer Price Index (CPI) data for January.

Canada CPI Preview: Forecasts from seven major banks, inflation likely eased in January.

Stock and bond markets in the US return to action following a long weekend. The benchmark 10-year US Treasury bond yield holds steady at around 4.3% and US stock index futures trade in negative territory in the European morning. Meanwhile, the US Dollar (USD) Index clings to modest daily gains above 104.00 after closing the first day of the week virtually unchanged.

During the Asian trading hours, the People's Bank of China (PBoC) announced that it maintained the one-year Loan Prime Rate (LPR) unchanged and cut the five-year LPR by 25 basis points (bps) from 4.20% to 3.95%. Shanghai Composite and Hang Seng indexes were last seen trading marginally higher on the day.

USD/CAD continues to fluctuate in a narrow channel at around 1.3500 early Tuesday. The pair reached its highest level since December near 1.3600 in the previous week but erased a large portion of its gains to end  the week with small gains slightly below 1.3500.

Canada CPI Preview: Inflation expected to rise at a slower 3.3% rate in January.

Japanese Finance Minister Shunichi Suzuki offered some mild verbal interventions on Tuesday, repeating that they are closely watching the movements in foreign exchange market with a high sense of urgency. Speaking on the same matter, Japanese Finance Ministry official Atsushi Mimura said that the government “is always communicating and coordinating with other countries in case for an FX intervention.” USD/JPY trades in positive territory above 150.00 following these comments.

After closing the first day of the week flat, GBP/USD came under modest bearish pressure and retreated below 1.2600 during the Asian trading hours on Tuesday.

EUR/USD struggled to find direction and moved up and down in a narrow band below 1.0800 on Monday. Early Tuesday, the pair extends its sideways grind above 1.0750.

Following Friday's rebound, Gold continued to push higher and closed in positive territory on Monday. XAU/USD holds its ground early Tuesday and trades at around $2,020.