On Monday, the Nigerian naira (NGN) was the best-performing currency among the 20 global currencies we track, while the Mexican peso (MXN) showed the weakest results. The euro (EUR) was the leader among majors, while the U.S. dollar underperformed.
Gold reaches two-week highs
The gold price rose by 0.5% on Monday, reaching a two-week high, despite the uneventful economic calendar.
Gold investors focus on several central banks' interest rate decisions this week. The Federal Reserve (Fed) will set its interest rate decision tomorrow at 6:00 p.m. UTC, the Bank of England and the Swiss National Bank will hold meetings on Thursday, while the Bank of Japan officials will meet on Friday.
All decisions can affect XAU/USD greatly, but the Fed's decision is the most important one. The market expects the regulator to keep the base rate unchanged, but traders will carefully study the post-meeting statement for any cues on the future path of U.S. interest rates. Any hawkish comments or suggestions that the base rate may stay elevated longer will put downward pressure on gold.
XAU/USD was rising slightly during the Asian session. Today, the volatility will probably remain relatively low due to a lack of important events. 'Spot gold may retrace into a support zone of 1,921–1,927 USD per ounce, as it faces a resistance at 1,932,' said Reuters analyst Wang Tao.
The Canadian dollar rises as the risk sentiment improves
The Canadian dollar (CAD) gained 0.28% on Monday as the U.S. dollar decreased ahead of the Federal Reserve (Fed) interest rate decision on Wednesday.
USD/CAD dropped to a one-month low as the release of the upbeat macro statistics from China reinforced optimism about the global economy. In addition, the price of crude oil continued to rise, boosting the Canadian dollar's price.
USD/CAD fell sharply in the Asian session. Today, traders should focus on the publication of the Canadian Consumer Price Index (CPI) at 12:30 p.m. UTC. The report will significantly impact the Bank of Canada's (BOC) next interest rate decision. Earlier this month, the BOC kept the base rate unchanged at 5%, but the regulator mentioned it could raise borrowing costs again if inflation remains high.
"Canadians would love the Central Bank to declare that rate hikes are over. That's not coming any time soon, given the stickiness of inflation and the rise in energy prices," said Adam Button, the chief currency analyst at ForexLive. If today's CPI is higher than expected, USD/CAD will likely continue to fall—possibly towards 1.34200. However, if the CPI is lower than the forecast, the sell-off should stop, and USD/CAD may rebound towards 1.35000.