Forex Today: Canadian inflation data and FOMC Minutes could wake the markets up

Here is what you need to know on Tuesday, November 21:

The US Dollar (USD) suffered losses against its major rivals on Monday as the bullish action in Wall Street allowed risk flows to continue to dominate the financial markets. The USD stays under modest bearish pressure early Tuesday as investors shift their focus to the minutes of the Federal Reserve's October 31-November 1 policy meeting. The US economic docket will also feature Existing Home Sales data and Statistics Canada will release Consumer Price Index (CPI) figures for October.

The USD Index registered its weakest lowest close since late August below 104.00 on Monday and extended its slide below 103.50 on Tuesday. In the meantime, the benchmark 10-year US Treasury bond yield dropped below 4.4% in the Asian session and put additional weight on the currency's shoulders.

In the minutes of the November policy meeting, the Reserve Bank of Australia (RBA) said that policymakers considered for raising rates or holding steady but saw the case for hiking was stronger given inflation risks had increased. The RBA noted that whether further tightening will be required depend on data and the assessment of risks. After posting strong gains on Monday, AUD/USD continued to push higher in the Asian session and touched its highest level since early August near 0.6600.

EUR/USD registered modest gains on Monday and rose above 1.0950 early Tuesday. European Central Bank Governing Council member Francois Villeroy de Galhau said on Tuesday that interest rates have reached a plateau, where they will remain for the next few quarters.

GBP/USD closed the first trading day of the week above 1.2500 and advanced to its highest level in over two months beyond 1.2540 in the early European morning on Tuesday.

USD/JPY extended its downtrend for the third straight day on Monday and lost nearly 1% on a daily basis. The pair stays on the back foot on Tuesday and it was last seen trading at its weakest level since mid-September at around 147.50.

Inflation in Canada, as measured by the change in the Consumer Price Index (CPI), is forecast to soften to 3.2% on a yearly basis in October from 3.8% in September. Ahead of this data, USD/CAD fluctuates in a very tight range slightly above 1.3700.

Canada CPI Preview: Inflation to soften further while Loonie awaits its momentum

Following Monday's choppy action, Gold gathered bullish momentum and was last seen rising 0.8% on the day above $1,990.