CANADA FX DEBT-C$ wins back some value after January plunge
* Canadian dollar at C$1.1081 or 90.24 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr and Alastair Sharp TORONTO, Feb 4 (Reuters) - The Canadian dollar recovered lost ground versus the greenback on Tuesday, as a sharp January slump left some strategists wondering if near-term risks have been too harshly judged. The loonie, as Canada's currency is colloquially known, has slipped as economic data points to a healthier recovery south of the border and the two countries' central banks take divergent policy positions. But the intense selling pressure may have been overdone, some analysts said, implying that inflation and employment reports later this week need to show only minor positives to provoke loonie buying. "The massive move lower for the Canadian dollar through January priced in a lot of dovishness," said Greg Moore, senior currency strategist at Royal Bank of Canada. "The month of February is, at the margin, in terms of event risk, tilted towards Canadian-dollar positive developments." Still, many analysts expect the recent respite from loonie selling to be temporary and see the currency resuming its downward path. Canadian dollar selling intensified last month as the Bank of Canada left the door open to an interest rate cut. By contrast, the U.S. Federal Reserve has begun scaling back its monetary stimulus, and the U.S. economy is expected to outperform Canada's this year. The contrast is not absolute, however, with U.S. manufacturing data on Monday showing activity slowed sharply in January. The view that the performance gap between the two countries could be more narrow that some had anticipated gave the loonie some support on Tuesday, said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. "If the end game is about who is going to tighten rates first and when, I think any slowdown States-side certainly doesn't accelerate the timing of any rate hikes in the U.S. relative to Canada. They may well be timed around the same period," Mikolich said. "If we're just keeping pace with each other, which is what the data lately has been suggesting, I think we might see a little bit of a pause before any further Canadian dollar weakness." The Canadian dollar was at C$1.1081 to the greenback, or 90.24 U.S. cents, stronger than Monday's close of C$1.1097, or 90.11 U.S. cents. The Canadian dollar touched fresh 4-1/2-year lows last week but has built some momentum since then as investors consolidate positions. Data on Friday showed investors had pared back Canadian dollar short positions in the week ended Jan. 28. "We see the Canadian dollar now consolidating just below C$1.11 and I think it does open up a bit of room to test back down to that C$1.0950 area, where we've seen the previous bottom," Mikolich said. "Most likely this is a short-term trend here. I don't think we've lost our central bank's bias toward a weaker currency." The Canadian economic calendar is light until Thursday when investors will get data on the trade balance for December. The closely watched unemployment report is set for Friday, with hiring forecast to have picked up in January after the Canadian economy unexpectedly shed jobs at the end of the year. Canadian government bond prices were lower across the maturity curve, with the two-year off 6 Canadian cents to yield 0.961 percent and the benchmark 10-year down 39 Canadian cents to yield 2.345 percent.