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Canadian dollar weakens ahead of Bank of Canada rate announcement

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TORONTO - The Canadian dollar closed lower Friday as the currency continued to weaken ahead of next Wednesday's Bank of Canada interest rate announcement.

The loonie fell 0.42 of a cent to 91.11 cents US.

The currency has already shed almost three cents US this year for a variety of reasons, including poor trade and employment data and an American currency that has risen as the Federal Reserve starts to cut back on its massive bond buying program.

Canada's dollar has also been under pressure as a result of the central bank's dovish stance on interest rates, which aren't expected to rise until next year.

The outlook is more pessimistic in some quarters. Analysts say currency markets are currently pricing in a 20 per cent chance of an Bank of Canada interest rate cut this year.

On the commodity markets, the February crude contract on the New York Mercantile Exchange rose 41 cents to US$94.37 a barrel.

March copper was unchanged at US$3.34 a pound while February gold bullion rose $11.70 to US$1,251.90 an ounce.

On the economic front, U.S. housing starts fell 9.8 per cent to an annual rate of 999,000 in December following an impressive 23.1 per cent gain the previous month. Still, home construction chalked up its best year since 2007 in 2013.

Other data showed building permits slipped three per cent in December. U.S. factory production in December rose 0.4 per cent following gains of 0.6 per cent in both November and October.

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