USD/CAD extends the rally above 1.4400 on bullish US Dollar

• USD/CAD gathers strength to near 1.4425 in Monday's Asian session.
• The Fed's cautious stance and Trump tariff threats support the USD.
• Higher crude oil prices might boost the commodity-linked Loonie.

The USD/CAD pair extends its upside to near 1.4430 during the Asian trading hours on Monday. The potential US trade tariffs drag the Canadian Dollar (CAD) lower against the Greenback. However, the optimism around a likely change in Canadian government and a rise in crude oil prices might cap the downside for CAD.

The upbeat US employment report supported the US Federal Reserve's (Fed) cautious stance toward rate cuts this year, supporting the USD. The US Nonfarm Payrolls (NFP) rose by 256K in December versus 212K prior (revised from 227K), the US Bureau of Labor Statistics (BLS) reported Friday. This reading came in above the market consensus of 160K. Additionally, the Unemployment Rate edged lower to 4.1% in December from 4.2% in November.

Furthermore, the mounting fears that pledges by President-elect Donald Trump to impose tariffs on imports might could undermine the CAD. "We are assuming that Trump hits Canada with tariffs this year, which is likely to weigh on the loonie," said Stephen Brown, deputy chief North America economist at Capital Economics.

On Sunday, Canadian Prime Minister Justin Trudeau said that the government isn't looking for a trade war with the new administration but will have to retaliate if the US puts tariffs on Canadian products. Meanwhile, higher crude oil prices could lift the CAD. It's worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value.