USD/CAD struggles above 1.3500 with Fed Powell's speech in focus

• USD/CAD faces selling pressure above 1.3500 ahead pf Fed Powell's speech.
• The Fed would provide cues about the likely interest rate cut size in November.
• Investors expect the BoC to ease monetary policy further in the remainder of the year.

The USD/CAD pair strives to sustain above the psychological support of 1.3500 in Monday's New York session. The Loonie asset faces pressure as the US Dollar (USD) struggles to gain ground ahead of the Federal Reserve (Fed) Chair Jerome Powell's speech, which is scheduled at 17:00 GMT.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, hovers above the yearly low of 100.20. Meanwhile, the market sentiment appears to be asset-specific as US equities are under pressure, while risk-perceived currencies have performed strongly

In today's session, investors will pay close attention to Fed Powell's speech to get fresh cues about whether the central bank will cut interest rates again by larger-than-usual 50 basis points (bps) or will reduce them gradually by 25 bps in November.

According to the CME FedWatch tool, traders see an almost 40% chance for the Fed reducing interest rates by 50 bps to 4.25%-4.50% in November, while the rest supports for a regular size of 25 bps.

On the economic data front, investors will focus on a slew of United States (US) labor market data, releasing this week, to get fresh cues about the current status of job growth. Market participants will also pay close attention to the US ISM Manufacturing and Service PMI, which will be published on Tuesday and Thursday, respectively.

This week, the Canadian Dollar (CAD) will be influenced by market expectations for Bank of Canada (BoC) interest rate path for the last quarter of this year. Financial markets expect the BoC to continue reducing interest rates further due to growing risks to economy and the labor market.