• USD/CAD gathers strength to around 1.3620 in Tuesday’s early Asian session. 
• The upbeat job data prompted traders to scale back bets on further jumbo Fed rate reductions.
• Higher crude oil prices might cap the downside for the Loonie. 

The USD/CAD pair extends the rally to near 1.3620 during the early Asian session on Tuesday. Strong labor market data on Friday caused traders to sharply ratchet back bets on aggressive Federal Reserve (Fed) interest-rate cuts, which boosts the US Dollar (USD) broadly. 

The US employment reports on Friday showed a rise in Nonfarm Payrolls (NFP) and a decline in the Unemployment Rate, prompting traders to scale back bets on further Fed rate reductions. Investors expect the US central bank to cut rates by just 25 basis points (bps) in the November meeting, rather than 50 bps. This, in turn, provides some support to the USD. 

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, stalled near the highest level since mid-August around 102.50. According to the CME FedWatch Tool, the markets are now pricing in around 85% chance of 25 bps Fed rate cuts in November, up from 31.1% last week. 

However, Minneapolis Fed President Neel Kashkari said on Monday that he supported the Fed's decision to cut rates by 50 bps, adding that the balance of risks shifted from "high inflation towards maybe higher unemployment. Traders will take more cues from the speeches from the Fed’s Raphael Bostic, Phillip Jefferson and Susan Collins on Tuesday. Any dovish comments from the Fed officials could drag the Greenback lower against the Canadian Dollar (CAD).