* Canadian dollar at C$1.0617 or 94.19 U.S. cents * Bond prices mostly lower across the maturity curve By Leah Schnurr TORONTO, Jan 2 (Reuters) - The Canadian dollar firmed against the greenback on Thursday, though gains were capped by broad strength from the U.S. currency in what was expected to be quiet trading with some investors still on holiday.
The Canadian dollar enters 2014 with many investors expecting the currency to weaken in the first few months of the year as the Bank of Canada maintains a more dovish policy stance and as the Federal Reserve gradually winds down its U.S. economic stimulus program.
"It's very quiet trading," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto. "The Canadian dollar is trading at about the average level it's been at the last month." The Canadian dollar was at C$1.0617 to the greenback, or 94.19 U.S. cents, stronger than Wednesday's North American close of C$1.0643, or 93.96 U.S. cents, according to Thomson Reuters data. The U.S. dollar was up 0.7 percent against a basket of currencies.
The Bank of Canada's official close for the Canadian currency on Tuesday, ahead of Wednesday's New Year's Day holiday, was C$1.0636, or 94.02 Canadian cents.
Over the last 10 years, the Canadian dollar has ended January softer than where it started eight times, with an average loss of 0.6 percent, Sutton said.
"A fairly clear seasonal pattern for January. Certainly this year that would be in line with where our forecasts are." Sutton expects the Canadian dollar to weaken over the next six months before stabilizing in the second half of the year as a stronger U.S. economic recovery benefits Canada. A weaker loonie should also aid the Canadian economy Overseas, data showed euro zone manufacturing grew at the fastest rate since mid-2011 in December, though China's growth remained modest.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 1-1/2 Canadian cents to yield 1.142 percent and the benchmark 10-year down 1 Canadian cent to yield 2.776 percent.