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• USD/CAD posts modest losses near 1.3775 in Tuesday’s early Asian session.
• A weak US employment report and uncertainty over Fed independence undermine the US Dollar. 
• Lower crude oil prices might weigh on the commodity-linked Loonie and cap the downside for the pair. 

The USD/CAD pair trades with mild losses around 1.3775 during the early Asian session on Tuesday. Weaker-than-expected US July employment data and the resignation of a Federal Reserve Governor weigh on the US Dollar (USD) against the Canadian Dollar (CAD). The US ISM Services Purchasing Managers Index (PMI) will take center stage later on Tuesday. 

Data released by the US Bureau of Labor Statistics (BLS) on Friday missed the estimates, with the US Nonfarm Payrolls (NFP) rising by 73,000 in July, versus a 14,000 increase (revised from 147,000) in the prior month. This reading came in worse than the estimations of 110,000. Additionally, the US Unemployment Rate climbed to 4.2% in July from 4.1% in June, as expected. The readings prompted investors to ramp up bets of imminent Federal Reserve (Fed) rate cuts, which undermine the Greenback. 

An unexpected resignation by Fed Governor Adriana Kugler also opened the door for US President Donald Trump to make an imprint on the US central bank much earlier than expected. The developments raise concern over the Fed’s independence and contribute to the USD’s downside.

On the other hand, a decline in crude oil prices might drag the commodity-linked Loonie lower and create a tailwind for the pair. Oil prices edge lower after the Organization of Petroleum Exporting Countries and allies (OPEC+) announced plans to boost oil production by 547K barrels per day (bps) for September. It’s worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD value.

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