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Loonie drifts lower, greenback strengthens on better than expected housing data

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TORONTO - The Canadian dollar closed sharply lower Wednesday amid positive U.S. housing data.

The currency dropped 0.34 of a cent to 89.86 cents US.

The U.S. dollar strengthened further mid-morning amid data showing that sales of new homes rebounded in January to the fastest pace in more than five years. The Commerce Department said sales of new homes increased 9.6 per cent last month to a seasonally adjusted annual rate of 468,000.

That came as a surprise to economists who had been forecasting a sales drop in January of around four per cent, due to winter storms in many parts of the country.

The dollar also strengthened ahead of remarks Thursday from Federal Reserve chair Janet Yellen, whose appearance in front of the Senate's Banking Committee was delayed earlier this month due to a winter storm.

Traders also looked ahead to other key data coming out over the next few days.

In Canada, the current account balance for the fourth quarter will be released on Thursday, while the latest gross domestic product figures will be out on Friday.

Beyond that, traders are also awaiting next week's interest rate announcement from the Bank of Canada and Canadian and U.S. jobs data.

Commodity prices were mixed with the April crude contract in New York up 76 cents to US$102.59 a barrel.

March copper was down one cent at US$3.25 a pound while April bullion fell $14.70 to US$1,328 an ounce.

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