USD/CAD was trading in negative territory around 1.3810 in early Asian trading on Friday. Concerns about a US court ruling that could change the outlook for US tariffs weighed on the dollar. Investors will be keeping a close eye on the US personal consumption expenditures (PCE) price index for April and Canadian gross domestic product (GDP) data due later on Friday.

Late Thursday, a federal appeals court temporarily paused its broad ruling on US President Donald Trump's global tariffs to take more time to consider the government's request for longer-term restrictions. The Trump administration's unpredictable policies could exert some selling pressure on the US dollar (USD) relative to the Canadian dollar (CAD) in the short term.

In addition, weak US economic data, including US initial jobless claims, dragged the dollar lower. The US Department of Labor (DOL) showed on Thursday that new claims for unemployment benefits climbed to 240,000 in the week ended May 24, compared with 226,000 (revised from 227,000) the previous week. The figure was higher than the market's expectation of 230,000.

Meanwhile, lower crude oil prices could weaken the commodity-linked Canadian dollar and help limit losses in the pair. It’s worth noting that Canada is the largest exporter of oil to the United States, and lower crude oil prices tend to have a negative impact on the value of the Canadian dollar.