* C$ at C$1.0337 vs US$, or 96.74 U.S. cents * U.S. and UK markets closed for public holidays * Bank of Canada expected to keep interest rate unchanged on Wednesday * Bond prices mostly lower By Solarina Ho TORONTO, May 27 The Canadian dollar softened on Monday after a mostly volatile previous week following debate on when the Federal Reserve will pull back its stimulus measures, with investors turning their attention to the Bank of Canada's next interest rate move on Wednesday. Trading was particularly quiet with the United States and Britain both closed for public holidays. "It's been an exceptionally quiet day. We haven't seen a lot of movement really - a slight weakness in the Canadian dollar, but it's been very tight ranges for all the currencies," said Camilla Sutton, chief currency strategist at Scotiabank. The Canadian dollar finished Monday's session at C$1.0337 versus the U.S. dollar, or 96.74 U.S. cents, slightly weaker than Friday's finish at C$1.0321, or 96.89 U.S. cents. Canada's dollar, which was mostly underperforming other major currencies, was trading narrowly, between C$1.0301 and C$1.0344 on Monday. With little news to drive the currency, attention is focused on the Bank of Canada, which will announce its next scheduled interest rate decision on Wednesday. It will be outgoing governor Mark Carney's final policy decision before he takes the helm at the Bank of England. Stephen Poloz is his successor. The central bank is unanimously expected to keep its benchmark rate unchanged at 1 percent, according to a Reuters poll of 34 global economists. "They will still continue to maintain their tightening bias, because at this stage Canada's (economy) weakening off on its own. I don't think losing the bias to tighten is something they'd be wanting to do at this stage," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets. "The debate now is almost, 'Is Canada or the U.S. going to hike first?' when it's always been assumed it'd be here." Forecasters are expecting the bank to next hike interest rates in the final quarter of 2014, which is not far off from the Fed's expectations it will begin hiking around 2015. Mikolich said there are no surprises expected on Wednesday, but that the market will likely parse over any analysis on growth and inflation projections. Canada's quarterly and monthly GDP figures will be released on Friday. Sutton believes the Canadian dollar has already priced in a significant amount of negative news and that a big surprise would only come on stronger-than-expected data. Prices for Canadian government debt were mostly lower, particularly for longer-term bonds, with the two-year bond shedding 2.5 Canadian cents to yield 1.044 percent and the benchmark 10-year bond falling 26 Canadian cents to yield 1.981 percent.
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