The Canadian dollar climbed against its major counterparts in the early European session on Friday, as European stocks extended rally on solid earnings and oil prices advanced amid weakness in dollar.

Investors shrugged off the possibility of higher inflation and more interest rate hikes from the Federal Reserve.

Shares in Renault rallied 2.5 percent after it posted record sales and earnings for 2017.

In economic front, U.S. housing starts for January and University of Michigan's preliminary consumer sentiment data for February are due later in the day.

The U.S. dollar remained on the defensive, amid lingering worries over massive deficit in the wake of infrastructure spending and large corporate tax cuts announced by Trump administration.

A weak dollar tends to raise appeal of dollar-denominated commodites.

Crude for April delivery rose $0.53 to $61.70 per barrel.

The loonie rose to an 11-day high of 1.2451 against the greenback, from Thursday's closing value of 1.2479. The loonie is seen finding resistance around the 1.22 level.

The loonie advanced to 1.5577 against the euro, off its early 2-year low of 1.5649. If the loonie extends rise, 1.54 is seen as its next resistance level.

Data from Destatis showed that Germany's wholesale price inflation accelerated slightly in January, after easing in the previous three months.

Wholesale prices climbed 2.0 percent year-over-year in January, faster than the 1.8 percent rise in December.

The loonie recovered to 85.12 against the yen, from an early 2-day low of 84.69. The next possible resistance for the loonie is seen around the 86.5 mark.

On the flip side, the loonie dropped to more than a 2-week low of 0.9952 against the aussie and held steady thereafter. The pair finished yesterday's deals at 0.9911.

Looking ahead, U.S. housing starts, building permits and import price index for January and University of Michigan's preliminary consumer sentiment for February as well as Canada manufacturing sales for December will be out in the New York session.

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