USD/CAD ticks up around 1.3850, Fed Cook's ousting keeps US Dollar on back foot

• USD/CAD edges up as the US Dollar holds ground despite Fed Cook's termination by US President Trump.
• Fed's Cook decided to file a lawsuit to defend her termination.
• Investors await US-Canada trade talks and Canadian GDP data.

The USD/CAD pair edges higher to near 1.3850 during the late Asian trading session on Wednesday. The Loonie pair gains marginally as the US Dollar (USD) ticks up, with the US Dollar Index (DXY) rising slightly to near 98.35.

However, the outlook for the US Dollar is under pressure as market experts doubt the dominance of the Greenback on expectations that decision-making by United States (US) financial institutions is unlikely to be rational going forward.

Concerns over the credibility of US institutions, especially the Federal Reserve (Fed), have escalated following Governor Lisa Cook's termination by President Donald Trump over mortgage allegations.

Fed's Cook has decided to file a lawsuit against her termination to keep her job, and his attorney has said in a statement that Cook's removal is not backed by factual evidence. "His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action," Cook's lawyer, prominent Washington attorney Abbe Lowell, said, Reuters reported.

Meanwhile, investors brace for a sideways trend in the Canadian Dollar (CAD) ahead of trade discussions between Canada and the US.

Earlier this week, Canadian cabinet minister Dominic LeBlanc fled Washington to meet US Commerce Secretary Howard Lutnick to discuss trade concessions.

The comments from Canada's LeBlanc have signaled that he is confident about closing a trade agreement with the US. "We are looking, I hope, for an agreement that will put us in a better position than we are right now," LeBlanc said in a French-language radio program on Monday.

On the domestic front, investors will focus on June and Q2 Gross Domestic Product (GDP) data, which will be released on Friday.