USD/CAD drifts lower to near 1.3850 amid tariff easing

• USD/CAD edges lower to near 1.3855 in Tuesday's early Asian session. 
• LeBlanc and Lutnick are set to meet later this week as Canada plans to ease most retaliatory tariffs against the US. 
• Rising Fed rate cut bets weigh on the US Dollar. 

The USD/CAD pair trades with mild losses around 1.3855 during the early Asian session on Tuesday. The Canadian Dollar (CAD) strengthens against the US Dollar (USD) on Canada's move to ease trade tensions with its largest trading partner. The Conference Board's Consumer Confidence, Durable Goods Orders and the Richmond Fed Manufacturing Index reports will be released later on Tuesday. 

Canada- US Trade Minister Dominic LeBlanc plans to meet with US Commerce Secretary Howard Lutnick in Washington this week. The move comes days after Canadian Prime Minister Mark Carney said that, beginning September 1, the federal government will mirror US tariffs by lifting them on goods that comply with the North American trade pact. However, countermeasures on steel, aluminum, and the auto sector will remain in place. These positive developments could provide some support to the CAD in the near term. 

Additionally, extended gains in crude oil prices could lift the commodity-linked Loonie. It's worth noting that Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.

Rising speculation of a September rate cut by the Federal Reserve (Fed) might drag the Greenback lower. Traders are now pricing in nearly an 84.3% odds for a cut of at least a quarter-point at the Fed's September meeting, down from 84.7% on Monday, according to the CME FedWatch tool. 

Traders will take more cues from the key US economic data released this week, including Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) Price Index data. If the report shows stronger-than-expected growth or any signs of hotter inflation, this might cap the downside for the USD against the CAD.