Overall, the Canadian dollar will retain a firm tone initially, but is likely to hit selling pressure towards parity against the US currency.

The Canadian dollar again hit selling pressure below the 1.01 level against the US currency on Thursday and dipped to 1.0140, although ranges were generally narrow.

The Canadian currency failed to gain any significant support from the push in oil prices to record highs as the currency was unsettled by an increase in risk aversion as equity prices weakened sharply.

Uncertainty is liable to be a key short-term feature as markets are likely to lack conviction over trends. The domestic influences are likely to remain limited, but a strong reading for producer prices would provide some support.

The Canadian currency pushed to 1.0055 in European trading on Friday as markets tested moving averages.