* C$ trims gains to $1.0576 after soft retail data
* Bonds mostly firmer across curve
* Next major technical level seen at C$0.9430 (Updates details, adds analyst comment)
TORONTO, April 21 (Reuters) - The Canadian dollar hit a 3-1/2 year high on Thursday as part of an across-the-board exit of the U.S. currency, though it pared some gains following unexpectedly weak Canadian retail sales data.
The Canadian unit jumped as high as C$0.9455 to the U.S. dollar, or $1.0576, early in the day, the highest level since November 2007.
It retreated slightly after overall retail sales figures for February rose a less-than-expected 0.4 percent, with the bulk of the gains coming from gasoline stations.
But traders said the currency still seemed to be on a strengthening trend that would take it closer to the modern-day high it reached it reached in November, 2007. That month it hit C$O.9059 to the greenback, or $1.1039, according to Thomson Reuters dealing data.
"(Retail sales data) is really not affecting too much of the trend here. This is going to continue on for some time," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets.
"Those that are following this trend and betting on it are starting to take profits down here below C$0.9500, but it's one where I do think retail sales number is being pushed aside for the headline CPI number we got a couple of days ago."
The currency accelerated its upward march after data on Tuesday showed Canada's annual inflation rate in March jumped to its highest level since September 2008, ratcheting up pressure on the Bank of Canada to resume raising interest rates soon. [ID:nN19274146]
Expectations of higher interest rates often strengthen currencies because they tend to attract capital flows. The Bank of Canada's key policy rate is at 1 percent. The U.S. Federal Reserve continues to keep rates there near zero.
FEW C$ BARRIERS AHEAD
At 9:45 a.m. (1345 GMT), the Canadian dollarwas at C$0.9506 to the U.S. dollar, or $1.0520, still up from C$0.9533 to the U.S. dollar at Wednesday's North American close.
Having broken through the C$0.95 level, analysts say there are few technical barriers in the way of the Canadian dollar.
Gavsie was looking for C$0.9430 -- last reached in November 2007 -- as the next technical level to watch for. But he cautioned that profit-taking from those in long-Canadian dollar positions could cut the rising pace of the currency's strength.
"We're still in a pretty good uptrend. The Canadian dollar is benefiting from the stampede into risk-seeking on the back of a much weaker U.S. dollar," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange.
Rising commodity prices continued to also provide underlying support for the commodity currency, with gold prices holding above $1,500 an ounce and U.S. crude maintaining levels above $110 a barrel. [O/R] [GOL/]
Strong U.S. corporate earnings also buoyed risk appetite in illiquid pre-Easter trade, threatening to drive the broadly weaker greenback to historic lows against a basket of currencies. [ID:nLDE73K0TJ] [FRX/]
Canadian bonds were mostly firmer after the retail sales data. The two-year bondfirmed half a Canadian cent to yield 1.806 percent, while the 10-year bond rose 22 Canadian cents to yield 3.302 percent. (With additional reporting by Ka Yan Ng; editing by Jeffrey Hodgson)
Our Standards: The Thomson Reuters Trust Principles.