The Canadian dollar spiked up against its major counterparts in the pre-European session on Friday, as oil prices advanced following a data showing a draw in U.S. crude oil inventories last week.
Crude for February delivery rose $0.36 to $60.20 per barrel.
Data from the Energy Information Administration showed Thursday that crude inventories fell by 4.6 million barrels in the week ended December 22. Analysts had forecast a decrease of 4.0 million barrels.
Meanwhile, gasoline stocks rose by 591,000 barrels and distillate stockpiles were higher by 1.1 million barrels last week.
Falling dollar supported commodities ahead of the New Year holiday.
Rising risk appetite also buoyed the loonie, as most Asian share rose tracking modest gains from the Wall Street.
In a light day of economic news, investors focus on German flash consumer price index later in the day for more direction.
The loonie climbed to an 8-day high of 0.9779 against the aussie, compared to 0.9790 hit late New York Thursday. If the loonie rises further, 0.96 is likely seen as its next resistance level.
Data from the Reserve Bank of Australia showed that Australia's private sector credit grew more than expected in November.
Private sector credit climbed 5.4 percent year-on-year in November, slightly faster than the 5.3 percent increase posted in October and the expected growth of 5.2 percent.
The loonie appreciated to 1.2550 against the greenback, its strongest since October 20. The next possible resistance for the loonie is seen around the 1.24 region.
The loonie hit more than a 3-week high of 1.4995 against the euro, after having dropped to 1.5017 at 2:00 am ET. The loonie is seen finding resistance around the 1.48 mark.
On the flip side, the loonie held steady against the yen, after having advanced to more than a 2-month peak of 89.93 at 7:15 pm ET. The pair ended Thursday's trading at 89.79.
Looking ahead, Eurozone M3 money supply for November is due shortly.
In the New York session, Baker Hughes U.S. rig count data is set for release.