USD/CAD rises to near 1.4000 on bullish US Dollar, eyes on US PPI da

• USD/CAD extends the rally to around 1.4000 in Thursday's early Asian session. 
• US CPI matched estimates in October. 
• The expectation of a more aggressive rate cut from the BoC than the Fed, lower crude oil prices weigh on the Loonie. 

The USD/CAD pair gains momentum to near 1.4000, the highest level since 2020 during the early Asian session on Thursday, bolstered by the stronger Greenback. The attention will shift to the US October Producer Price Index (PPI), which is due later on Thursday. 

The US Dollar (USD) climbed to the highest level since November 2023 due to so-called Trump trades and US inflation data for October. Donald Trump's victory in last week's US presidential election sparked expectations of potentially inflationary tariffs and other measures by his incoming administration, boosting the Greenback. 

US inflation increased as expected in October. Data released by the Labor Department's Bureau of Labor Statistics on Wednesday showed that the Consumer Price Index (CPI) rose by 2.6% YoY in October, matching prior forecasts. Additionally, the core CPI, which excludes the more volatile food and energy categories, jumped by 3.3% YoY during the same period, in line with expectations. This report could result in fewer interest rate cuts from the Federal Reserve next year, which might lift the USD against the Canadian Dollar (CAD). 

On the Loonie front, the expectation that the Bank of Canada (BoC) would keep on cutting rates faster than the Fed drags the CAD lower against the USD. The policymakers discussed the usual 25 basis point (bps) cut but saw a strong consensus among them for the larger step, the summary of deliberations said. 

Furthermore, the decline in crude oil prices continues to undermine the Loonie as  Canada is the largest oil exporter to the United States (US). The rebound in crude oil prices could support the CAD and cap the upside for the pair for the time being.