USD/CAD remains on the defensive below 1.3700, focus on Fedspeak, Canadian PMI data

• USD/CAD trades on a softer note around 1.3685 in Monday's early European session. 
• US NFP rose 175,000 in April from 315,000 in March; Unemployment Rate rose to 3.9% in April from 3.8% prior. 
• BoC governor said it may soon cut rates as he is more confident that inflation is moving in the right direction.

The USD/CAD pair remains on the defensive near 1.3685 on Monday during the early European trading hours. The Canadian Dollar (CAD) edges higher amid the rise in crude oil prices, which creates a headwind for USD/CAD. The release of Canada's Ivey Purchasing Managers Index (PMI) and employment data for April this week might offer some hints about the economic outlook and inflation trajectory in the Canadian economy. Apart from this, traders will monitor Fedspeak, with the Fed's Thomas Barkin and John Williams set to speak later on Monday. 

The downbeat US data on Friday raised the hope that a cooling labour market will prompt the Federal Reserve (Fed) to cut interest rates in September. The Labour Department reported that the US added 175,000 jobs in April from 315,000 in March (revised from 303,000). This figure came in weaker than the market, expectation of 243,000. 

Furthermore, the Unemployment Rate climbed from 3.8% in March to 3.9% in April. The Average Hourly Earnings, wage inflation, declined to 3.9% YoY in April from 4.1% in the previous reading. Finally, ISM Services PMI fell to 49.4 in April from 51.4 in March, worse than the protection of 52.0. In response to the data, the Greenback faced some selling pressure across the board as markets expect the Fed to lower its borrowing costs twice this year instead of only once before the data. Financial markets have priced in nearly 68%  odds of a September rate cut by the Fed, according to the CME Fedwatch tool. 

On the Loonie front, Bank of Canada (BoC) governor Tiff Macklem said last week that the Canadian central bank is more confident that inflation is moving in the right direction and that it may soon be appropriate to begin lowering its borrowing costs. Nonetheless, he poured cold water on hopes that borrowing costs would decline rapidly. 

Traders anticipate the BoC to start easing monetary policy at its next meeting in June, according to Refinitiv data. In the event that the Canadian central bank cuts interest rates before the Fed, this might weigh on the Canadian Dollar (CAD) and cap the pair's downside. Meanwhile, the recovery of oil prices lifted the commodity-linked Loonie against its rivals, as Canada is the largest oil exporter to the United States (US).