EUR up modestly with focus on next week's ECB - Scotiabank

The Canadian Dollar (CAD) is up modestly on the softer US Dollar (USD) on the session but is mixed against the core majors, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

Trade remains a key risk

"Moderate CAD gains are backed by positive risk sentiment and somewhat narrower spreads holding near the slimmest yield advantage for the USD since the end of last year. And while our estimated fair value for USD/CAD has nudged a little higher today (1.3615), the USD's divergence with its equilibrium estimate is growing."

"That may constrain the dollar's ability to strengthen and may encourage spot to nudge a little lower at least. Meanwhile, messaging from Canadian officials continues to indicate that hopes that negotiations could get all US tariffs removed are set to be disappointed."

"The USD's push higher from the early July low remains intact but the 50-day MA is developing into a short-term block on funds and intraday price signals lean a little soft. The mid/upper-1.37 area is a zone of congestion for the USD ahead of the intraday peak just under 1.38 seen on June 23rd. The USD still has quite a bit of work ahead if it is to strengthen much further. USD support is 1.3705/10 ahead of 1.3670/80."