USD/CAD jumps to near 1.4400 as US Dollar rises ahead of Trump's inauguration

• USD/CAD rises to near 1.4400 as the US Dollar gains amid uncertainty over US Trump's return to the White House.
• The US Dollar rises despite weak US Retail Sales for December and a sharp growth in Initial Jobless Claims.
• Investors expect the BoC to slow down the pace of winding up policy restrictiveness.

The USD/CAD pair climbs to near the key resistance of 1.4400 in Thursday's North American session. The Loonie pair strengthens as the US Dollar (USD) recovers Wednesday's losses, with investors turning cautious ahead of President-elect Donald Trump's swearing ceremony on January 20.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, rises to near 109.25. The safe-haven appeal of the US Dollar has improved as investors expect that Trump will provide an updated tariff plan soon after returning to the White House. This scenario will boost economic growth and inflationary pressures in the United States (US), which would force the Federal Reserve (Fed) to follow a more gradual policy-easing approach.

Meanwhile, traders have accelerated Fed dovish bets after the release of the US Consumer Price Index (CPI) data for December. The data showed that the annual core reading grew at a slower pace of 3.2% than estimates and the prior release of 3.3%. Also, month-on-month core CPI rose expectedly by 0.2%, slower than the previous release of 0.3%.

In Thursday's session, the US Initial Jobless Claims data for the week ending January 10 came in higher than projected. Individuals claiming jobless benefits for the first time came in higher at 217K than estimates of 210K and the former release of 203K. The US Retail Sales data for December grew moderately by 0.4%, compared to estimates of 0.6% and November's reading of 0.8%.

The Canadian Dollar (CAD) performs weakly as investors expect the Bank of Canada (BoC) to continue reducing interest rates. However, market participants expect the BoC to slow down the pace of dialing back policy restrictiveness as the recent labor market data for December remained upbeat. The Canadian economy added 90.9K workers in December, compared to 50.5K in November.