The Canadian dollar re-tested parity as emerging solutions for the credit crisis in Europe and strong manufacturing data in China and the U.S. fueled risk appetite.

The Canadian dollar lost ground against the greenback, with the USD/CAD bouncing back from parity.

With the economic docket expected to reinforce a weakened outlook for the Canadian economy, a batch of dismal data could spark a reversal in the exchange rate as investors weigh the prospects for future policy.

For this upcoming week, the economic docket is fairly muted as the only noteworthy release will be the Canadian employment report.

The Canadian dollar finished the week modestly higher against its downtrodden US namesake, but a late-week reversal warns that the Loonie may find it difficult to set fresh highs through upcoming trade.

Many assets and currencies have suspended their meaningful connections to economic and financially-based fundamentals in order to follow speculative biases. The Canadian dollar is no exception to this role.

With the outlook for crude oil looking extremely bullish in the near term despite nearing overbought levels, the loonie is poised to strengthen further against the greenback this week.

Activity will begin on Wednesday with the release of the Canadian Ivey PMI reading for September.

The Canadian dollar may continue to underperform more broadly as markets digest a relative slowdown in Canadian economic recovery.

The Canadian dollar finished the week on a sour note as it lost ground to the dollar and yen.