The loonie was trading 0.2% lower at 1.3605 per U.S. dollar, or 73.50 U.S. cents, after moving in a range of 1.3567 to 1.3612. For the week, the currency was on track to advance 0.6%.

"A spike in risk aversion in thin, late week trading has chipped away at the CAD’s rise (this week) a little but markets remain keen to pick up CAD on minor dips," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note. "This is a view we endorse."

A weak trend for the U.S. dollar, positive risk sentiment and higher metal prices have contributed to an improvement in the estimated fair value of the Canadian dollar over the past month, the strategists said. Canada is a major producer of copper as well as other commodities, such as oil.

With the U.S. markets closed for Independence Day, attention has turned to U.S. President Donald Trump's July 9 deadline for sweeping tariffs take to effect on countries that have not yet secured trade agreements with the United States. Canadian Prime Minister Mark Carney and Trump have agreed to reach some form of a trade deal by July 21.

Canada's services economy contracted at a steeper pace in June as uncertainty generated by U.S. trade policy depressed activity and cost pressures increased, S&P Global's Canada services PMI data showed. The headline Business Activity Index fell to 44.3 last month from 45.6 in May.

The price of oil fell 1% to $66.33 a barrel on expectations that OPEC+ producers will decide this weekend to raise output, while the Canadian 10-year yield was down 3.3 basis points at 3.361%, after earlier touching its highest level since June 16 at 3.402%.