The Canadian dollar spiked higher against its major counterparts in the European session on Friday, due to the monetary policy divergence between the Federal Reserve and the Bank of Canada.

The Bank of Canada recently announced decision to taper its QE program from C$4 billion to C$3 billion a week.

The central bank now expects inflation to return to 2 percent on a sustained basis some time in the second half of 2022.

That implies the BoC could raise its overnight rate earlier than expected.

The Fed said that it will maintain ultra-easy policy until "substantial further progress" towards its employment and price stability goals are attained.

Data from Statistics Canada showed that Canada's economy grew 0.4 percent in February, after a rise of 0.7 percent in the previous month.

Economists had expected an increase of 0.5 percent.

The loonie rose to 1.4820 against the euro, its biggest level since April 6. The loonie is likely to find resistance around the 1.44 level.

Data from Destatis showed that German economy contracted more than expected in the first quarter due to the coronavirus pandemic.

The gross domestic product fell 1.7 percent sequentially, in contrast to the 0.5 percent growth seen in the fourth quarter of 2020. This was bigger than the economists' forecast of -1.5 percent.

The loonie reached as high as 88.82 against the yen, up from Thursday's close of 88.66. If the loonie extends rise, 0.90 is possibly seen as its next resistance level.

Data from the Ministry of Economy, Trade and Industry showed that Japan industrial output climbed a seasonally adjusted 2.2 percent on month in March.

That exceeded expectations for a decline of 2.0 percent following the 1.3 percent decline in February.

The loonie jumped to 0.9555 against the aussie, setting a fresh 4-week high. On the upside, 0.92 is possibly seen as the next resistance level for the loonie.

The loonie, however, dropped to 1.2277 against the greenback as the latter firmed on upbeat economic data. This followed a high of 1.2266 logged at 8:15 am ET, which was its highest level since February 2018. The next likely support for the loonie is seen around the 1.25 level.

Data from the Commerce Department showed that U.S. personal income skyrocketed in the month of March.

The personal income soared by 21.1 percent in March after plunging by a revised 7.0 percent in February.