* C$ at C$0.96 to the U.S. dlr, or $1.0417
* Pulls back from session high of C$0.9549 after Fed news
* Bernanke says not ready to offer more easing yet
By Trish Nixon
TORONTO, July 14 (Reuters) - Canada's dollar pared gains to trade weaker against its U.S. counterpart on Thursday, retreating from a 2-month high, hit by comments from U.S. Federal Reserve Chairman Ben Bernanke on monetary policy.
The Canadian dollar, like the euro, weakened against the U.S. currency after Bernanke said he was not ready to take more monetary easing action yet. [FRX/]
"What is often the case with Bernanke, is he takes the opportunity in the second day of his testimony to sort of clarify or correct what he might think are misinterpretations from the first day," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
"Some of the risk-on sentiment that we had earlier in the day has dissipated."
Bernanke reiterated that the U.S. central bank would be ready to inject more money into the system should the U.S. economy worsen. But he told a U.S. Senate committee that the time had not come yet and noted inflation had picked up since late 2010. [ID:nN1E76D0IG]
The Canadian dollar had earlier received a lift from U.S. data that showed jobless claims dropped last weak and retail sales rose slightly. Both reports showed a bit more strength than analysts had expected. [ID:nN1E76D0BM].
Stronger U.S. data typically benefits the Canadian dollar, as the United States is Canada's largest export market.
But riskier assets, including commodities such as oil and copper, fell following Bernanke's testimony. [O/R] [MET/L]
Canada is a major exporter of natural resources, and movements in their prices often impact the direction of the currency.
At 12:50 p.m. (1650 GMT), the Canadian dollar CAD=D4 was at C$0.96 to the U.S. dollar, or $1.0417, compared with Wednesday's North American finish at C$0.9597, or $1.0420.
Earlier, it climbed to C$0.9549, or $1.0472, the highest point since May 11.
Chandler said he expects the currency to stay close to current levels throughout the session.
"It's still choppy. It's is having a hard time finding much direction so we're stuck in relatively narrow ranges."
Canadian bond prices were mixed, as some investors moved back toward safe-haven assets.
The five-year bond CA5YT=RR fell 3 cents to yield 2.182 percent, while the 30-year bond CA30YT=RR was off 5 cents, yielding 3.382 percent.
Canadian bonds mostly outperformed U.S. Treasuries, with the Canadian 10-year yield 3 basis points above its U.S. counterpart, compared with 7.2 basis points yesterday. (Editing by Jeffrey Hodgson)