USD/CAD remains depressed around mid-1.4300s, downside seems limited ahead of FOMC Minutes

• USD/CAD drifts lower on Wednesday and is pressured by a combination of factors. 
• Bullish Crude Oil prices underpin the Loonie and weigh on the pair amid a softer USD.
• The Fed's hawkish stance could help limit any further losses ahead of FOMC Minutes. 

The USD/CAD pair struggles to capitalize on the previous day's bounce from sub-1.4300 levels and attracts some sellers during the Asian session on Wednesday. Spot prices, however, hold comfortably above the lowest level in over two weeks touched on Monday and currently trade around mid-1.4300s, less than 0.10% for the day. 

As investors digest the recent political developments in Canada, hopes that Canada's economy could escape broad-based US tariffs turn out to be a key factor lending some support to the domestic currency. Furthermore, Crude Oil prices stand firm near a multi-month peak, which further seems to underpin the commodity-linked Loonie and exert some downward pressure on the USD/CAD pair amid a softer US Dollar (USD).

Any meaningful downside for the buck, however, seems limited amid the prospects for slower interest rate cuts by the Federal Reserve (Fed) in 2025. The bets were reaffirmed by Tuesday's upbeat US macro data, which pointed to a still resilience economy amid the optimism over US President-elect Donald Trump's expansionary policies. This remains supportive of elevated US Treasury bond yields and favors the USD bulls.

Apart from this, persistent geopolitical tensions stemming from the protracted Russia-Ukraine war and tensions in the Middle East, along with trade war fears, support prospects for the emergence of some dip-buying around the safe-haven buck. This, in turn, warrants some caution before placing aggressive bearish bets around the USD/CAD pair and positioning for an extension of the recent pullback from a multi-year peak.

Investors now look forward to the US economic docket - featuring the release of the ADP report on private-sector employment and the usual Weekly Initial Jobless Claims data - for some impetus later during the early North American session. The focus, however, will remain glued to the FOMC meeting Minutes, which will influence the USD price dynamics and produce some meaningful trading opportunities around the USD/CAD pair.