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* C$ at C$1.0210 vs US$, or 97.94 U.S. cents * US$ continues broad selloff * U.S. manufacturing data below expectations * Canada existing home sales falls in February By Solarina Ho TORONTO, March 15 (Reuters) - The Canadian dollar touched its strongest level against its U.S. counterpart in three weeks on Friday, bolstered by a broader U.S. dollar selloff and with the latest U.S. manufacturing data coming in below expectations. The greenback extended Thursday's retreat as some traders took profits from its recent rally and as uncertainty crept in over whether recent encouraging U.S. economic data will be enough to prompt an early retreat from monetary easing by the Federal Reserve. It was also pressured by strong gains in sterling after the Bank of England's governor suggested he did not want the pound to fall any further. "The overwhelming driver is a retracement, a pull-back in the U.S. dollar...On a number of fronts, the U.S. dollar made major gains over the last month," said Adam Button, a currency analyst at ForexLive in Montreal. He said that some long-term U.S. dollar positions were being reduced. At 9:44 a.m. (1344 GMT), the Canadian dollar was trading at C$1.0210 against the U.S. dollar, or 97.94 U.S. cents, firmer than Thursday's North American finish of C$1.0223, or 97.82 U.S. cents. It had touched C$1.0181, 98.22 U.S. cents, earlier in the session. The loonie, as the currency is nicknamed, pared some gains after data showed sales of existing homes in Canada fell in February from January and year-over year sales plummeted, more evidence that the country's once-hot housing market is slowing. "Housing is the chief risk for the Canadian dollar and the Canadian economy and any indication of a strong move in one direction or another, the market will be sensitive," said Button. He noted, however, that Friday's data point was not a major mover. "One data point isn't going to write the story." The currency's performance was mixed against other major currencies. It was stronger than the Australian dollar after touching its weakest level in more than a year on Thursday, and was weaker against the sterling, the euro and the Japanese yen. U.S. consumer prices recorded their largest increase in nearly four years in February as the cost of gasoline surged, but there was little sign of a broad pickup in inflation to trouble the Federal Reserve. The New York state manufacturing sector expanded for the second month in a row in March, though the pace of growth cooled slightly and the index for new orders fell, data from the New York Federal Reserve showed on Friday. The price of Canadian government debt was higher across the curve, with the two-year bond up 1.5 Canadian cents to yield 0.998 percent, while the benchmark 10-year bond rose 23 Canadian cents to yield 1.922 percent.