USD/CAD trades below 1.32 as WTI rallies to multi-month highs above $54

• WTI gains more than 2% on Wednesday.
• Strong ADP data boosts the greenback.
• US Dollar Index stays the positive territory ahead of FOMC.

Despite the broad-based USD strength on Wednesday, the USD/CAD pair fell sharply as the commodity-sensitive loonie gained traction on the back of surging crude oil prices. As of writing, the pair was trading at 1.3199, losing 0.6% on a daily basis.

After closing the previous day 2.2% higher, the barrel of West Texas Intermediate continued to push higher after today's data from the U.S. showed a smaller than expected buildup in crude oil inventories. At the moment, the barrel of WTI is trading at $54.68, adding 2.68% on the day.

• WTI challenges YTD peaks above $54.00 post-EIA report.

On the other hand, the greenback gained traction after the monthly data released by the ADP showed that the private sector employment increased by more than expected from December to January. Following an initial rally to the 96 mark, however, the US Dollar Index failed to preserve its momentum with investors now waiting for the FOMC announcements. “The Federal Reserve’s first meeting of 2019 will be the key focus for global markets. Chair Powell will conduct a press conference and he will be quizzed on the souring global outlook with trade and government shutdown adding to the uncertainty,” said Westpac analysts.

• US: ADP - Private sector employment increased by 213K in January vs 175K expected.
• FOMC Preview: What 8 major banks are expecting from January meeting?

Key technical levels