* Canadian dollar at C$1.0963 or 91.22 U.S. cents * Bond prices mixed across the maturity curve By Leah Schnurr TORONTO, Feb 18 (Reuters) - The Canadian dollar firmed modestly against the greenback on Tuesday, extending this month's bounce-back from January's heavy slump as investors looked ahead to inflation data later in the week.
The loonie had little reaction to data that showed foreigners reduced their holdings of Canadian securities for the first time in six months in December.
While the report highlighted the skepticism of foreign investors about the Canadian economy heading into the end of 2013, investors will be more interested in the January data, which will be released next month, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.
The Canadian dollar fell sharply in January, touching 4-1/2 year lows but the currency has been able to recover some ground this month.
"What we'll be looking for in January is to see whether the weakness for capital markets in Canada is truly weakness or it's more just a competitive rebalancing of the loonie," Smith said.
Market focus was on the Canadian inflation report for January due on Friday. The Bank of Canada has expressed concern about weak inflation, and investors will look at the report for further insight on the potential path of monetary policy, which has been a major driver of the currency.
Investors will get a look at Canadian retail sales figures for December on the same day.
"We're range-bound until the end of the week, in my opinion, where we get some more domestic data to really give us a catalyst to where this move goes," Smith said.
The Canadian dollar was at C$1.0963 to the greenback, or 91.22 U.S. cents, stronger than Friday's close of C$1.0983, or 91.05 U.S. cents. Many North American trading desks were closed on Monday for Canadian and U.S. holidays.
Another potential driver later this week will be the release of the minutes from the U.S. Federal Reserve's latest policy-setting meeting. The minutes will be parsed for clues on what factors might prompt the central bank to pause in the reduction of its economic stimulus program.
Baring any surprises from the Fed release, the loonie will likely be stuck in a range between C$1.10 and the low C$1.09 area until the end of the week, Smith said.
Canadian government bond prices were mixed across the maturity curve, with the two-year up 1 Canadian cent to yield 1.008 percent, while the benchmark 10-year was unchanged to yield 2.468 percent.
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