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* C$ dips to C$0.9544 to the U.S. dollar, or $1.0478
* Bond prices track U.S. Treasuries higher (Updates to midday)
TORONTO, April 25 (Reuters) - The Canadian dollar turned slightly lower against the U.S. dollar on Monday afternoon as the price of oil lost ground and markets braced for the U.S. Federal Reserve's two-day policy meeting on Tuesday and Wednesday.
Liquidity was lighter than usual, given the Easter Monday holiday across much of Europe. Markets were also on guard for a news conference by Fed Chairman Ben Bernanke on Wednesday, which is expected to be the highlight of this week's events. [ID:nN20193559] [ID:nN1968758]
"I really just think what's going on today is literally just a little bit of profit-taking ahead of Bernanke because liquidity is thin, we're not seeing a lot of flow," said David Watt, senior currency strategist at RBC Capital Markets.
Bernanke's news conference is the first regularly scheduled briefing by a Fed chief in the central bank's 97-year history, kicking off what is scheduled to be a four-times-a-year event.
"A lot of people are wondering what he's going to say, how he's going to say things, and what tone he's going to take," Watt said.
"You don't have a lot of examples of Bernanke doing press conferences... But then again, it's not like he's a rookie."
At 1:22 p.m. (1722 GMT), the Canadian dollar CAD=D4 was at C$0.9544 to the U.S. dollar, or $1.0478, down slightly from Thursday's North American finish of C$0.9537 to the U.S. dollar, or $1.0485. Most North American markets were closed on Friday for the Easter holiday. The currency hit its highest level in 3-1/2 years last week at C$0.9455 to the U.S. dollar, or $1.0576.
"We probably need to get a close below C$0.95 to get a little more of that momentum back," said Steve Butler, director of foreign exchange trading at Scotia Capital.
Beyond the C$0.95 level, analysts say there are few technical barriers in the way of record highs for the Canadian dollar.
The currency's strength early in the session drew on soaring commodity prices after North American markets reopened following the long Easter holiday weekend.
But U.S. oil prices, which hit their highest level since September 2008, fell as investors took profits, spurred by a sell-off in silver, which had risen close to its record high. Oil and other commodities had risen as inflation fears weakened the U.S. dollar and as markets eyed continued unrest in Libya, Nigeria and the Middle East. [O/R]
Canadian bonds closely tracked U.S. Treasury prices higher as market players got set to look to the Fed for signs it will not rush to shrink its huge balance sheet, though buying was kept to a minimum before a series of auctions.
The two-year bond CA2YT=RR rose 5 Canadian cents to yield 1.781 percent, while the 10-year bond CA10YT=RR climbed 35 Canadian cents to yield 3.247 percent. (Reporting by Ka Yan Ng and Claire Sibonney; editing by Peter Galloway)