USD/CAD edges lower near 1.3550 despite firm US Dollar

• USD/CAD falls to near 1.3550 even though the US Dollar gains ground.
• Traders are divided over the Fed's likely interest rate cut size in November.
• Investors await the BoC Macklem's speech for fresh interest rate guidance.

The USD/CAD pair falls slightly to near 1.3560 in Monday's European session even though the US Dollar (USD) has bounced back strongly. The USD recovers sharply as traders are split over the Federal Reserve's (Fed) likely monetary policy action in the November meeting.

The market sentiment appears to be asset-specific, as European currencies have faced selling pressure while Asian peers have outperformed. Also, S&P 500 futures have posted decent gains in European trading hours. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, climbs above 101.00.

According to the CME FedWatch tool, traders see an almost 50% chance for the Fed delivering a second straight interest rate cut of 50 basis points (bps) to 4.25%-4.50%.

On the contrary, the latest Reuters poll shows that the Fed will cut its interest rates by 25 bps in each of its monetary policy meetings in the remaining year.

In today's session, investors will focus on the preliminary United States (US) S&P Global PMI data for September, which will be published at 13:45 GMT. The US Composite PMI is estimated to have grown slower due to fragile expansion in activities in the service sector, along with continuous contraction in the manufacturing sector activity.

On the Loonie front, the Canadian Dollar (CAD) will be influenced by the Bank of Canada's (BoC) Governor Tiff Macklem's speech, which is scheduled for Tuesday. Tiff Macklem is expected to provide fresh guidance on how much the central bank will reduce interest rates by the year-end.