By Hideyuki Sano
TOKYO, June 11 (Reuters) - The yen ticked higher while the Canadian dollar fell modestly on Monday, after U.S. President Donald Trump threw the G7's efforts to show a united front into disarray though market reaction was relatively muted.
The euro edged up as traders looked to the European Central Bank's policy meeting on Thursday for when and how it would wind up its bond purchases and eventually lift interest rates from current deep negative levels.
The Group of Seven summit held in Canada laid bare a deep rift between Trump and other leaders as the U.S. president, who left the G7 meeting early, tweeted he was backing out of the joint communique and lashed out against Canadian Prime Minister Justin Trudeau. continued to bash Canada and Europe after he arrived in Singapore, where he plans to hold a historical meeting with North Korean leader Kim Jong Un on Tuesday. Canadian dollar, which has been dogged by fears Trump may scrap the North American Free Trade Agreement (NAFTA), fell 0.3 percent to C$1.2960 CAD=D3 .
The Mexican peso MXN=D2 lost 0.1 percent to 20.316 MXN=D2 , not far from its 16-month low of 20.6505 touched on Friday.
The yen, which is often used as a funding currency for riskier investments and tends to gain when investors' risk appetite sags, rose 0.1 percent to 109.45 yen on the dollar JPY= .
Still, the reaction was moderate as few traders had expected the G7 to reach a meaningful agreement on trade.
Many investors were also bracing for a confluence of big events this week, including the Trump-Kim summit and policy reviews by the world's three major central banks.
The euro gained 0.25 percent to $1.1801 EUR= , edging back up to a two-week high of $1.1840 touched on Thursday.
A flurry of comments from key ECB officials last week fuelled expectations that it will give clear indications on Thursday that its stimulus will be ended by the end of the year.
"I have to wonder why suddenly ECB officials made such comments last week. I would suspect those who have shorted the euro will continue to cover their short positions ahead of the meeting," said Koichi Takamatsu, head of forex at Nomura Securities.
Ahead of the ECB, the U.S. Federal Reserve is almost unanimously expected to raise interest rates for the second time this year on Wednesday.
The market's focus is on the Fed's projection on the future path of interest rates.
"I would think forecast of four rate hikes this year would be already priced in. But if the Fed suggests faster rate hikes in 2019 than previously anticipated, that could destabilise the market," said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
On the other hand, the Bank of Japan is expected to stick to the current super-easy policy after its two-day meeting that ends Friday, keeping the yen's gains in check. (Editing by Shri Navaratnam and Jacqueline Wong)