However, one prominent Canadian analyst we follow reckons we could be heading back towards the situation where moves in the oil market feed into the valuation of CAD. And, this does not bode well for those holding out for a stronger Canadian currency.

Before we hear from Stephen Gallo at BMO Capital, we see the following forex rates on offer (28/8):

The euro to Canadian dollar exchange rate (EUR/CAD) is 0.05 pct higher on a daily basis at 1.4342.The pound to Canadian dollar exchange rate (GBP/CAD) is 0.03 pct higher at 1.8020.The US dollar to Canadian dollar rate (USD/CAD) is 0.06 pct down at 1.0859.(Keep in mind that these are spot market rates to which a discretionary spread is added by your bank/provider. An independent FX provider will however guarantee to undercut your bank's offer, in some cases delivering up to 5% more FX. Please learn more.)

CAD and the Importance of Oil Prices

According to Gallo, FX investors will need to start watching the oil price closely:

"WTI crude dropped to $92.50 last week, or, its lowest level since mid-January. As a USD/CAD driver, WTI crude has been gradually gaining in importance since late July. But a sharper pullback below $90.00 in the near-term could accelerate that trend, and magnify upside USDCAD risks stemming from more favourable interest rate differentials," says the BMO analyst.

Pound sterling vs Canadian dollar

Should the link-up between oil prices and CAD reassert itself this could potentially play into a GBP/CAD rally.

Kamil Amin at Caxton FX takes a look at the near-term drivers:

"The Canadian dollar strengthened marginally against sterling on Thursday, as weak PMI data out of China and the eurozone and uncertainty surrounding Yellen's speech today, offered firm support for the commodity-linked currency. Today sees the release of inflation figures out of Canada.

"With inflation expected to drop off slightly on the previous month, closer to the BoC's target level, we should see the Canadian dollar remain in tact against most of its G10 peers. Canadian retail sales are expected to improve slightly on the the previous month today and this could provide some firm support.

"With speculation regarding an interest rate hike in the UK before the end of year muted, we should see sterling continue correcting from the overvalued levels we became accustomed to in Q2.

"Investors have pushed back bets regarding an interest hike since the BoE inflation report and weaker than forecasted inflation figures.

"We don't expect the current time frame of May 2015 to remain set in stone, especially with sterling markets expected to be data driven through to the end of the year. If we do see Q3 data surprise the market, we fully expect speculation regarding an earlier than expected interest rate hike to materialize again."

Canada's central bank to remain unmoved by data

Contradictory economic data releases in August ultimately leave the loonie little changed.

"The loonie initially weakened after consumer inflation slowed more than expected to 2.1 pct annually in July, which was below forecasts of 2.2 pct from 2.4 pct in June. But loonie bulls liked retail sales which blew past forecasts with a 1.1 pct rise in June, which easily scaled forecasts of a 0.3percent rise," says Joe Manimbo at Western Union.

Moreover, May’s reading got improved to a 0.9percent gain from an initial reading of 0.7percent.

"From a central bank policy perspective, though, today’s mixed data reinforced the Bank of Canada’s neutral stance which is neither positive nor a negative for the loony," says Manimbo.