USD/CAD drifts lower below 1.3550 as investors await BoC's Macklem speech

• USD/CAD weakens around 1.3530 in Tuesday's early Asian session. 
• Several Fed officials open the door to further large interest-rate cuts by the end of this year.
• Investors will closely watch the speeches from Fed's Bowman and BoC's Tiff Macklem on Tuesday.

The USD/CAD pair edges lower to near 1.3530 during the early Asian session on Tuesday. The weakness of the Greenback drags the pair lower. Investors will keep an eye on the US September Consumer Confidence data, along with the speech from the Federal Reserve's (Fed) Governor Michelle Bowman and the Bank of Canada's (BoC) Governor Tiff Macklem on Tuesday. 

Several Fed officials on Monday left the door open to additional large interest-rate cuts later this year. Chicago Fed President Austan Goolsbee said on Monday that more rate cuts over the next year would help the US central bank achieve a soft landing for the economy and manage inflation without hurting the labor market. 

Meanwhile, Atlanta Fed President Raphael Bostic stated that cutting the cycle with a large move will help bring interest rates closer to neutral levels as the risks between inflation and employment become more balanced. Minneapolis Fed President Neel Kashkari said that he expects to lower interest rates by quarter-point moves at each of the central bank's two remaining meetings this year, per Bloomberg. 

The flash reading of the US Purchasing Managers Index (PMI) showed a slight slowdown in manufacturing activity in September, while the service sector continued to fall slowly. The Manufacturing PMI declined to 47.0 in September, a 15-month low, from 47.9 in August, worse than the expectation of 48.5. The Services PMI eased to 55.4 in August versus 55.7 prior, above the market consensus of 55.2. 

However, this report provides little to no impact on the USD. The bigger-than-expected Fed rate cut and firmer expectation of additional rate reduction this year might continue to undermine the Greenback against the Canadian Dollar (CAD) in the near term. 

The BoC Governor Tiff Macklem is scheduled to speak later on Tuesday. The speech might offer some hints about how much the Canadian central bank will cut interest rates by the year-end. "Now, the Bank of Canada must be careful about over-correcting with a monetary setting that pushes inflation through its target on the downside to any great degree. We estimate for Canada that the 'neutral' overnight rate is 2.25 percent, or two full percentage points lower than the current settings," said TD Economics.