CANADA FX DEBT-C$ firms, focus turns to next week's data

* Canadian dollar at C$1.0639 or 93.99 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Jan 3 (Reuters) - The Canadian dollar strengthened
against the greenback on Friday, retracing some of the previous
day's decline, though the currency remained in its recent range
as investors looked ahead to next week's round of economic data.
    Trading volumes were not yet back to normal with some
investors still on holiday and others impacted by the major
snowstorm that hit the U.S. northeast. 
    Market action has been choppy in recent sessions, leaving
the loonie in a trading range even as it closed out 2013 as the
currency's weakest year since 2008.
    "It seems like the loonie is quite content in its current
range and seems to be wanting to hang out there, waiting for
direction from economic data," said Rahim Madhavji, president at
Knightsbridge in Toronto.
    "Everything is priced in at the moment, with Fed tapering,
the lack of inflation in Canada, so we're heading into the new
year really in a range between C$1.06 and C$1.07."
    With little else on the economic calendar on Friday,
investors focused on speeches from a number of U.S. Federal
Reserve officials, including outgoing Fed Chairman Ben Bernanke.
    Bernanke gave an upbeat assessment of the U.S. economy in
coming quarters and said the Fed is no less committed to highly
accommodative policy now that it has trimmed its bond-buying
    The Fed last month surprised some in the markets by
announcing it will trim its amount of bond purchases - known as
quantitative easing - by $10 billion to $75 billion a month.
    The Canadian dollar ended the North American
session at C$1.0639 to the greenback, or 93.99 U.S. cents,
stronger than Thursday's close of C$1.0673, or 93.69 U.S. cents.
    The Canadian dollar enters 2014 with most analysts expecting
the currency will come under more pressure, hurt by the
combination of a dovish Bank of Canada and the gradual unwinding
of the Fed's economic stimulus.
    Key themes for the loonie will be whether Canadian inflation
remains tame and what stronger U.S. economic data will mean for
the pace of tapering, said Greg Moore, FX strategist at TD
Securities in Toronto.
    "In the case that we do see an extension of this low
inflation theme in Canada and continued strength in U.S.
economic activity, we could see a quicker pickup in U.S.
dollar-Canadian dollar," which could put the Canadian dollar at
C$1.08 in the next couple of months, said Moore.
    Next week is expected to bring more normal trading activity,
as well a round of economic data that includes labor market
reports for both Canada and the United States.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 2 Canadian
cents to yield 1.137 percent and the benchmark 10-year
 down 10 Canadian cents to yield 2.755 percent.