USD/CAD struggles to break above 1.4400 ahead of US-Canada employment data

• USD/CAD faces pressure to extend its upside above 1.4400 ahead of US-Canada labor market data for December.
• The US Dollar performs strongly as the Fed has become worried about a potential slowdown in progress in the disinflation trend.
• Soft Canadian employment data will boost hopes of BoC super-size rate cuts bets.

The USD/CAD pair struggles to extend its upside above the immediate resistance of 1.4400 from the last two trading sessions. The Loonie pair trades inside Wednesday’s trading range in Thursday’s European session, with investors focusing on the United States (US) and Canadian employment data for December, which will be published on Friday.

The US Nonfarm Payrolls (NFP) report is expected to show that the economy added 154K fresh workers in December, lower than the former release of 227K. The Unemployment Rate is expected to remain steady at 4.2%.

Ahead of the US NFP data, the US Dollar (USD) performs strongly across the board as the latest Federal Open Market Committee (FOMC) minutes have signaled that officials are worried about growing risks to a slowdown in the disinflation trend due to upcoming potential trade and immigration policy changes, which are expected under President-elect Donald Trump’s administration.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, stays firmly above the key support of 109.00.

Meanwhile, Trump is considering declaring a national economic emergency to formulate a new tariff plan on a legal footing. Investors consider this as a fresh escalation in the path towards a global trade war.

In the Canadian region, investors expect the labor market to have witnessed a fresh addition of 25K workers in December, almost half the number of job-seekers hired in November. The Unemployment Rate is seen accelerating to 6.9% from 6.8%. Signs of a slowdown in the labor demand would boost expectations that the Bank of Canada (BoC) will continue easing the monetary policy at a larger-than-usual pace of 50 basis points (bps).