The US dollar firmed after one Fed official said two rate hikes were possible by year-end and another said an increase could come as soon as next month.
Oil prices fell, snapping a week-long rally, as investors weighed the prospect of potential talks among producers reining in ballooning oversupply. US crude futures prices were down 0.52 percent to $46.34 a barrel.
At 9:53 a.m. EDT (1353 GMT), the Canadian dollar was trading at C$1.2894 to the greenback, or 77.56 US cents, weaker than Tuesday's close of C$1.2853, or 77.80 US cents.
The currency's strongest level of the session was C$1.2850, while its weakest was C$1.2919.
On Tuesday, the loonie touched its strongest since June 24 at C$1.2798 as domestic data showed a rebound in factory sales. . The currency last fell on Aug. 5.
Still, weak US business investment has hampered a long-awaited pick-up in growth of Canada's non-energy exports, economists say, while a weaker Canadian dollar has not helped exports as much as expected.
Canadian government bond prices were slightly lower across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 0.575 percent and the benchmark 10-year falling 3 Canadian cents to yield 1.068 percent.
The 2-year yield touched its highest since July 29 at 0.603 percent.
Canadian retail sales for June and inflation data for July are due on Friday.