USD/CAD extends downside below 1.3700 ahead of Fed's Powell speech

• USD/CAD weakens to near 1.3680 in Tuesday's early Asian session. 
• Speculation around a possible replacement of Fed Chair Jerome Powell weighs on the US Dollar. 
• Lower crude oil prices might help limit the pair's losses. 

The USD/CAD pair extends the decline to 1.3680 during the early Asian session on Tuesday. The renewed concerns over the US Federal Reserve (Fed) independence weigh on the US Dollar (USD) against the Canadian Dollar (CAD). Fed Chair Jerome Powell is set to speak later on Tuesday.

A White House official said that US President Donald Trump is likely to fire Fed Chairman Powell soon. However, Trump denied it in a Truth Social post on Sunday, calling it "typically untruthful." Investors will closely monitor the prospect that Trump will find a way or a reason to remove Powell before the end of his term next year. Concerns over the Fed's independence could undermine the Greenback in the near term. 

Fed Chair Jerome Powell may be under more pressure from the White House to lower interest rates later this month, but analysts expect a dovish move from the Fed is likely months away. Markets are now pricing in nearly a 59% odds of a rate cut by the US central bank in September, according to the CME FedWatch tool. 

Meanwhile, crude oil prices edge lower as investors assess the impact of tariffs on oil demand. Lower crude oil prices could drag the commodity-linked Loonie lower in the near term. It's worth noting that Canada is the largest oil exporter to the US and a decline in crude oil prices tends to have a negative impact on the CAD value.