CANADA FX DEBT-C$ steady after recent bounce from 4-1/2 year low

Reuters

* Canadian dollar at C$1.1055 or 90.46 U.S. cents * Bond prices barely changed across the maturity curve * New Fed chair Yellen and Fed's tapering in focus By Leah Schnurr and Alastair Sharp TORONTO, Feb 10 (Reuters) - The Canadian dollar was little changed against the greenback on Monday as a light economic calendar for the week left the currency searching for a catalyst after it managed to regain some ground in recent sessions.

Data on housing starts on Monday was one of the few economic reports on tap for the week. Starts cooled to 180,248 units in January from a downwardly revised 187,144 in December, but the Canadian dollar had little reaction to the figure, which came in close to economists' expectations for 184,000.

"The market seems to be watching the Olympics today, as there has not been a great deal of action," said John Curran, senior vice president at CanadianForex.

He said traders will look for clues on the pace of monetary easing when U.S. Federal Reserve chair Janet Yellen starts giving congressional testimony on Tuesday.

"We've come a very long way in a short period of time," he said, referring to the Canadian dollar's sharp decline to a 4-1/2 year low in January. "I tend to think we are still overdone and there needs to be a bit of paring back of Canadian dollar shorts. There is a great deal (of negative news) built into the weakness of the Canadian dollar currently." After a weak start to the year, the Canadian dollar bounced from up last week from its 4-1/2 year low, but most analysts expect its path, ultimately, to be downward.

"If you had to pick a continuing trend, it would still be Canada weakening after this sideways period unless we were getting a consistent period of stronger-than-expected Canadian data," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto.

A more dovish turn in policy from the Bank of Canada in recent months has weighed on the Canadian dollar as analysts expect interest rates to stay low for some time. A recent poll showed market watchers expect the currency to weaken to C$1.12 in the next six months.

The Canadian dollar has also been pressured by the market's perception that the Bank of Canada is comfortable with letting the loonie weaken in the hope that exports will benefit.

"Unless that changes, we're probably still destined to see Canada weaken a little bit," Mikolich said.

The Canadian dollar ended at C$1.1055 to the greenback, or 90.46 U.S. cents, weaker than Friday's close of C$1.1039, or 90.59 U.S. cents.

The loonie could see a trading range of C$1.0970 to C$1.1120 this week, Mikolich said.

Investors were also digesting comments last week from the Bank of Canada's senior deputy governor that signaled a willingness to ignore the role intense retail competition plays in disinflation, saying that for monetary policy purposes this is "good disinflation".

"It was seen somewhat dovishly," Mikolich said.

The comments were "consistent with the tone for the bank, which is no need to raise rates any time too soon and willing to see inflation pick up a little bit before they even consider any kind of tightening of monetary conditions," he added.

Canadian government bond prices were mixed and barely changed across the maturity curve, with the two-year down barely lower to yield 0.981 percent and the benchmark 10-year up half a Canadian cents to yield 2.407 percent.

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