CANADA FX DEBT-C$ holds steady after recent surge
* C$ at C$0.9888 vs US$, or $1.0113 * Selling pressures weigh after crossing C$0.99 barrier * Bond prices mixed By Jon Cook TORONTO, Aug 16 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Thursday as the currency's recent surge was being met with some resistance on behalf of investors. On Wednesday the Canadian dollar broke through what analysts referred to as a key "psychological" level, crossing the C$0.99 threshold against the greenback, or $1.01, for the first time since early May. "It definitely is feeling the pressure of continued selling," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets. After closing on Wednesday at C$0.9890 against the U.S. dollar, or $1.0111, the Canadian currency weakened back to C$0.99 overnight. But that move was shortlived, as it rebounded early on Thursday to hit a session high at C$0.9883 versus the U.S. dollar, or $1.0118 - its strongest level since May 4. "It seems as though investors take their foot off the gas every time we do reach the previous lows," noted Gavsie. The Canadian currency has moved in lock step with the U.S. dollar, which has been boosted by recent improved economic data. On Wednesday, data showed U.S. industrial output rose in July at its fastest pace since April. This followed surprisingly strong U.S. retail sales figures that damped expectations the Fed will launch another round of bond buying, or quantitative easing, as early as September. At 8:22 a.m. ET (1222 GMT), Canada's dollar was at C$0.9888 against its U.S. counterpart, or $1.0113. Gavsie said the currency could weaken further, falling back towards C$0.9950 as traders bought up more U.S. dollars at lower prices. On Thursday, the latest weekly initial claims report and the Philly Fed survey of factory activity in the mid-Atlantic region for August will be watched to assess whether the world's largest economy is regaining momentum in the third quarter. "If there is an economic comeback or slight growth signs in the U.S., we're going to see the U.S. dollar catch a little bit more of a lift and back up to parity (with the Canadian dollar)." Meanwhile the Canadian dollar was still seen outperforming most major currencies on the crosses. On Thursday it hit a fresh one-month high against the Australian dollar. Canadian bond prices were mixed. The two-year bond rose 1 Canadian cent to yield 1.244 percent, and the benchmark 10-year bond fell 7 Canadian cents to yield 1.962 percent.
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