* Canadian dollar at C$1.0715 or 93.33 U.S. cents * Bond prices higher across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, July 14 (Reuters) - The Canadian dollar firmed against the greenback on Monday, recovering after a two-week low hit in the previous session, but a monetary policy statement from the Bank of Canada due later in the week was likely to keep the currency confined to a trading range.
While the central bank is widely expected to hold rates at 1 percent, where they have been since 2010, the market will be parsing the bank's statement for its reaction to recent stronger-than-expected inflation.
Most analysts expect that the Bank of Canada will stick to the neutral tone it has held since October, especially after Friday's disappointing labor market report.
"The focus really will be on ... how the Bank of Canada tries to position itself around its policy stance," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto.
"They'll certainly try to point to the weakness on the employment side as reason to keep rates low for longer, but whether they can maintain a neutral stance in monetary policy in light of inflation above 2 percent will be the interesting comments to follow." The Canadian dollar ended the North American session at C$1.0715 to the greenback, or 93.33 U.S. cents, stronger than Friday's close of C$1.0734, or 93.16 U.S. cents.
The loonie gained 1.6 percent through June in a rally fueled by the robust inflation reading, higher oil prices and short covering. But the currency's momentum stalled last week as it was hit hard by the report that showed the economy lost jobs in June.
In the aftermath of that report, Wednesday's statement from the Bank of Canada could prove to be a fairly pivotal turning point for the Canadian dollar, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.
"I think we'll get up into that C$1.0815 level if we do get a reiteration of their neutral-to-dovish message," said Smith.
In a relatively light week for domestic data, the inflation report due at the end of the week will also be a focal point. Inflation is forecast to hold at a 2.3 percent annualized rate in June.
South of the border, investors will watching congressional testimony from U.S. Federal Reserve Chair Janet Yellen on Tuesday and Wednesday.
Canadian government bond prices were higher across the maturity curve, with the two-year up 2.2 Canadian cents to yield 1.096 percent and the benchmark 10-year up 6 Canadian cents to yield 2.210 percent.
(Editing by Jonathan Oatis)
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