The Canadian dollar lost ground against its major counterparts in the European session on Friday, as oil prices dropped amid a firm dollar and on the OPEC warning that high prices could hit the demand outlook.

The dollar held firm after strong U.S. inflation data fueled expectations for faster rate hikes by the Federal Reserve.

The Organization of the Petroleum Exporting Countries said that a slowdown in the pace of recovery in the fourth quarter is likely to reduce demand.

In its monthly report, the OPEC slashed the oil demand forecast for the fourth quarter to 99.49 million barrels per day, down by 330,000 barrels per day from the October forecast.

The cartel said that slower-than-expected demand in China and India in the third quarter has contributed to a lowering of the outlook for the year.

European stocks were mixed as investors digested strong U.S. inflation reading and corporate earnings.

The loonie reached a session's low of 90.46 versus the yen, from a high of 90.86 seen at 2:15 am ET. On the downside, 88.00 is seen as the next likely support for the loonie.

The loonie dipped to more than a 5-week low of 1.2605 against the greenback, following a high of 1.2569 set at 2:30 am ET. The loonie is seen finding support around the 1.29 level.

The loonie was lower against the euro, at 1.4411. The loonie may test support around the 1.46 region, if it falls again.

After rising to 0.9161 at 5 pm ET, the loonie weakened to 0.9194 against the aussie. The loonie is poised to find support around the 0.94 region.

Looking ahead, University of Michigan's preliminary consumer sentiment for November is scheduled for release in the New York session.

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