Forex Today: Fedspeak and Canada inflation data to grab market attention

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

Major currency pairs seem to have stabilized in the European morning on Tuesday as investors await the next catalyst. Eurostat will release revisions to July inflation data later in the session and Statistics Canada will publish Consumer Price Index data for July later in the day. Market participants will also pay close attention to comments from Federal Reserve (Fed) officials.

After starting the week under bearish pressure, the US Dollar (USD) continued to weaken against its major rivals in the second half of the day on Monday as the bullish action in Wall Street pointed to an improving risk mood. In the early European session, US stock index futures trade marginally higher on the day and the USD Index holds steady slightly below 102.00.

EUR/USD gained 0.5% for the second consecutive trading day on Monday and reached its highest level since late December near 1.1090. Early Tuesday, the pair stays in a consolidation phase at around 1.1080. The European Central Bank (ECB) will release the Negotiated Wage Rates data for the second quarter later in the day.

During the Asian trading hours, the People’s Bank of China (PBoC) announced that it left the one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.35% and 3.85%, respectively. This decision came in line with the market expectation.

The minutes of the Reserve Bank of Australia's (RBA) August policy meeting showed that the board members considered a case to raise rates but decided that a steady outcome would better balance the risks. The central bank further stated that the cash rate might have to stay steady for an "extended period." After rising nearly 1% and reaching its highest level in a month on Monday, AUD/USD retreated slightly and was last seen trading above 0.6700. Meanwhile, NZD/USD preserves its bullish momentum and trades at a fresh six-week-high at around 0.6130.

Inflation in Canada, as measured by the change in the CPI, is forecast to edge lower to 2.5% on a yearly basis in July from 2.7% in June. USD/CAD trades marginally lower on the day near 1.3620 early Tuesday after losing 0.3% on Monday.

GBP/USD extended its uptrend and reached its highest level in over a month at 1.3000 during the Asian trading hours on Tuesday. The pair stays slightly below this level to start the European session.

USD/JPY recovered from the two-week-low it touched on Monday but closed the day deep in negative territory. The pair edges higher toward 147.00 in the European morning on Tuesday.

Gold corrected lower toward $2,480 on Monday but regained its traction in the American session to close the day slightly above $2,500. Early Tuesday, XAU/USD fluctuates in a tight channel at around $2,505.