USD/CAD trades flat above 1.3750, all eyes on US CPI release

• USD/CAD flatlines around 1.3775 in Tuesday's early Asian session.  
• Traders brace for the US July CPI, which is due later on Tuesday. 
• Canada's economy shed over 40,000 jobs in July; the Unemployment Rate held steady at 6.9%. 

The USD/CAD pair trades on a flat note near 1.3775 during the early Asian session on Tuesday. The Canadian Dollar (CAD) weakens against the US Dollar (USD) as traders turn cautious ahead of a key US inflation report later on Tuesday. Additionally, Federal Reserve (Fed) officials are scheduled to speak, including Thomas Barkin and Jeffrey Schmid.

Traders adjusted their expectations for interest rate reductions from the US central bank after soft data on US jobs last week. The release of the US July Consumer Price Index (CPI) will be in the spotlight later in the day, as it might offer more hints as to whether the Fed lowers borrowing costs in the September meeting. Any signs of cooling inflation could cement bets for a cut next month and drag the USD lower against the CAD. 

Recent Canadian job data has prompted expectations for a Bank of Canada (BoC) interest rate cut, which weighs on the CAD. Canada's economy shed 40,800 jobs in July, compared to a gain of 83,100 jobs in the previous session, Statistics Canada reported on Friday. This figure came in worse than the estimations of 13,500 job additions. 

Meanwhile, the Unemployment Rate held steady at 6.9% in July, below the market consensus of 7.0%. Investors see a nearly 36% odds the BoC reduces rates at its next policy decision on September 17, up from 17% at the start of the month, according to Reuters. 

A fall in crude oil prices due to optimism over the proposed United States (US)-Russia meeting also undermines the commodity-linked Loonie. It's worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD value.