USD/CAD extends losses below 1.4000 amid higher Oil prices

• The USD retreats below 1.4000 against a stronger Canadian Dollar.
• WTI Crude prices appreciate beyond $58.00, buoying the commodity-sensitive Loonie.
• The unexpected rebound of Canada's CPI provided additional support to the CAD.

The US Dollar is losing ground for the second consecutive day against the Loonie, reaching lows right below 1.4000 on Wednesday's early European session, after having peaked at 1.4080 last week. The pair is suffering amid a significant rebound in Oil prices and broad-based US Dollar weakness.

The commodity-sensitive Canadian Dollar is drawing support from higher Oil prices. The US benchmark WTI Oil gained about $2 in the last two days, buoyed by a report from the American Petroleum Institute revealing that US Oil stocks fell unexpectedly last week, marking their first decline in the last four weeks.

Beyond that, US President Donald Trump said on Tuesday that he reached a deal with Indian Prime Minister Narendra Modi to reduce tariffs on Indian products in exchange for reducing their Oil imports from Russia.

Canada's CPI puts BoC easing into question

In Canada, Consumer Price Index figures released on Wednesday revealed an unexpected pick-up in price pressures. The monthly CPI grew 0.1% in September following a 0.1% contraction in the previous month. Year-on-year, price pressures accelerated to 2.4% from 1.9% in the previous month.

These figures cast some doubt on investors' expectations that the Bank of Canada will cut rates by 25 basis points after next week's meeting, and provided an additional impulse for the Canadian Dollar's recovery.

In the US, with the Sino-US trade war off the table, the focus has shifted back to the extended US government shutdown and expectations of upcoming rate cuts by the Federal Reserve, causing the US dollar to lose some of its shine from previous days.