* C$ at C$1.0302 or 97.07 U.S. cents * Market watches two-day Fed meeting for stimulus policy move * Domestic data shows some inflation in industrial prices * C$ hits almost three-year high vs A$ as Aussie rate cut expected By Alastair Sharp TORONTO, July 30 The Canadian dollar fell from a five-week high against its U.S. counterpart in light trade on Tuesday as traders bought the greenback ahead of Federal Reserve signals on monetary stimulus policy that could result in a wild swing in the currency pair. Beyond the Fed, which could on Wednesday point to a winding down of its asset purchase program later this year, risks also abound in U.S. and Canadian GDP readings, a meeting of the European Central Bank, and in U.S. jobs data due on Friday. The failure of the loonie, as Canada's currency is colloquially known, to strengthen beyond C$1.0250 in the last week encouraged U.S. dollar buyers to emerge, said David Bradley, director of foreign exchange trading at Scotiabank. "We've probably seen the bottom of the range in dollar/Canada," he said. "And if we get some hawkish Fed-speak over the next little while it will solidify that fact." The currency ended the session trading at C$1.0302 to the greenback, or 97.07 U.S. cents, compared with C$1.0260, or 97.47 U.S. cents, at Monday's North American close. If the Fed pulls back aggressively on its monetary stimulus, C$1.05 could be reached by the week's end, while a limited Fed move could push the pair back to an equal footing, according to Adam Button, a currency analyst at ForexLive in Montreal. "The spring is coiled very tightly now and whichever way this C$1.0250/C$1.03 range breaks, you're going to see a powerful move," Button said. The loonie soared to an almost three-year high of 93.05 Canadian cents against its commodity-backed cousin, the Australian dollar, after that country's central bank governor fueled expectations of a cut in interest rates next week. The Bank of Canada, conversely, has held to a mild tightening bias for months, which could be aided by industrial data that showed a surprise rise. "New Bank of Canada Governor (Stephen) Poloz will want to take any opportunity to establish his inflation-fighting credibility," Button said, while cautioning that domestic data would be dwarfed by potentially explosive Fed news. Producer prices rose 0.3 percent in June from May on the back of higher prices for autos and gasoline, while raw materials prices also gained. Analysts had expected no change in industrial prices. The two-year bond was off three and a half Canadian cents to yield 1.180 percent, while the benchmark 10-year bond fell 10 Canadian cents to yield 2.507 percent.