Forex Today: Markets remain choppy as focus shifts to BoC rate decision

Here is what you need to know on Wednesday, June 7:

Major currency pairs continue to trade in familiar ranges mid-week as investors remain in search of the next significant catalyst. Later in the day, the Bank of Canada (BoC) will announce its interest rate decision and release the policy statement. The US economic docket will feature Goods Trade Balance and Consumer Credit Change data for April. 

During the Asian trading hours, the data from China revealed that the trade surplus contracted to $65.81 billion in May from $90.21 billion in April. This reading came in much lower than the market expectation of $92 billion. On a yearly basis, Exports and Imports declined 7.5% and 0.8% respectively. Meanwhile, Australian Bureau of Statistics reported that the real Gross Domestic Product (GDP) grew at an annualized rate of 2.3% in the first quarter, compared to analysts' estimate of 2.4%. Following Tuesday's rally that was fuelled by the Reserve Bank of Australia's (RBA) unexpected to decision to raise its policy rate by 25 basis points, AUD/USD lost its traction early Wednesday and was last seen trading in negative territory slightly above 0.6650.

The US Dollar Index clings to small daily gains above 104.00 and US stock index futures trade flat early. Meanwhile, the benchmark 10-year US Treasury bond yield continues to fluctuate at around 3.7%.

The BoC is widely forecast to leave its policy rate unchanged at 4.5%. USD/CAD trades in a tight channel above 1.3400 early Wednesday. Previewing the BoC event, "we expect the BoC to leave the policy rate at 4.5%, but after stronger-than-expected consumer price inflation and GDP and with the labour data remaining robust, we cannot rule out a surprise interest rate increase," said economists at ING.

BoC Preview: Forecasts from six major banks, rates unchanged but hawkish bias.

EUR/USD closed in negative territory on Tuesday and continues to trade on the back foot below 1.0700 in the European morning.

GBP/USD struggled to find direction on Tuesday and closed the day little changed near 1.2400 for the second day in a row. Early Wednesday, the pair edges lower but manages to hold slightly above 1.2400.

USD/JPY edges lower toward 139.00 on Wednesday. The data from Japan showed earlier in the day that the Coincident Index improved slightly to 99.4 in April's flash estimate from 98.8 in March.

Gold price continues to move up and down in a narrow channel above $1,950 as the lack of volatility in the US yields makes it difficult for XAU/USD to gather directional momentum.

Bitcoin gained traction and erased all of its weekly losses by rising nearly 6% on Tuesday. BTC/USD, however, has lost its recovery momentum and retreated below $27,000 early Wednesday. Ethereum rose 4% on Tuesday and came within a touching distance of $1,900 before going into a consolidation phase.