USD/CAD slumps to 1.3150 as WTI surges to 4-month highs above $57

• Oil rally lifts loonie on Wednesday.
• US Dollar Index drops to two-week lows near 96.30.
• Coming up: FOMC will release minutes of its January 29-30 meeting.

The USD/CAD pair extended its slide for the fifth straight day on Wednesday and as the ongoing crude oil rally continues to support the commodity-sensitive loonie. After touching its lowest level in two weeks at 1.3150, the pair rebounded modestly and was last seen trading at 1.3166, losing 0.35% on a daily basis.

Ahead of the weekly API crude oil stock report from the U.S., the barrel of West Texas Intermediate preserved its bullish momentum on hopes of the U.S. and China reaching a trade deal and OPEC+ committing to its output cuts and rose above $57 for the first time since late November and was last seen adding 2.2% on the day at $57.30. 

On the other hand, investors seem to be moving to the sidelines as they wait for the FOMC to publish the minutes of its January 29-30 meeting. The fact that the FOMC won't be able to give the statement to the press ahead of the official release due to bad weather conditions in Washington could cause the volatility to go up in the minutes following the publication.

"There is an unusual degree of interest in today's FOMC minutes. The Fed's rate pause, first bruited in the December Projection Materials which reduced the estimated number of Fed Funds increases this year by one, is the topic de jour for the markets," says FXStreet Senior Analyst Joseph Trevisani and questions: "Has the Fed moved to a neutral policy or is this just a hiatus with rates hikes to be resumed in the second half if the threats to global economic growth recede?"

Technical levels to consider