The Canadian dollar settled at C$1.4006 to the greenback, or 71.40 U.S. cents, stronger than Thursday's official close of C$1.4048, or 71.18 U.S. cents.

It has made sharp gains since Jan. 20, when the currency hit its weakest since 2003 at C$1.4689.

"Another wild ride for dollar-Canada," said Jack Spitz, managing director of foreign exchange at National Bank Financial, who added a strong finish to the session bodes well for momentum.

"Canada has been a relative outperformer based predominantly on crude oil," he added.

Oil prices have rebounded more than 25 percent since hitting 12-year lows last week on prospects of a deal between major exporters to cut production and curb one of the biggest supply gluts in history. [O/R]

Canada's economy grew for the first time in three months in November, rising 0.3 percent.

The data supported a recovery in the Canadian dollar since the Bank of Canada surprised many traders last week and left its policy rate on hold at 0.50 percent.

"It probably puts (growth in) quarterly GDP (gross domestic product) around zero, which is where the Bank of Canada was tracking," said Andrew Kelvin, senior rates strategist at TD Securities.

Adding further support to the risk-sensitive Canadian dollar, shares jumped globally after the Bank of Japan stunned markets with a surprise move to negative interest rates.

In other domestic data, producer prices fell 0.2 percent in December from November, the fifth consecutive monthly drop, on lower prices for energy and petroleum products, Statistics Canada said.

Canadian government bond prices were higher across the maturity curve.

The two-year price was up 1.5 Canadian cents to yield 0.42 percent and the benchmark 10-year rose 6 Canadian cents to yield 1.217 percent.

(Additional writing by Alastair Sharp; Editing by Jeffrey Benkoe and James Dalgleish)

By Fergal Smith