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* Canadian dollar backs off seven-month high
* Bonds mixed, few influences
* Market liquidity thin due to holidays in UK, U.S.
TORONTO, May 25 (Reuters) - The Canadian dollar was weaker against the U.S. currency on Monday, retreating after making a four-day climb to its firmest level in seven months.
Part of the currency's surge last week was attributed to market worries about the AAA credit ratings of the United States, while domestic inflation data was seen making it less likely that the Bank of Canada will resort to unconventional measures, such as quantitative easing, to stimulate the economy.
At 9:35 a.m. (1335 GMT), the Canadian dollar was at C$1.1258 to the U.S. dollar, or 88.83 U.S. cents, down from C$1.1203 to the U.S. dollar, or 89.26 U.S. cents, at Friday's close.
"The Canadian dollar has backed off a little bit, largely on profit taking after last week's 5 percent advance against the greenback," said Sal Guatieri, senior economist at BMO Capital Markets.
Commodity prices are expected to be a main influence with a lack of domestic economic data available. Trading conditions were expected to be muted with U.S. and British financial markets closed for holidays.
Market players will have to wait until the end of the week for any Canadian data, with the current account balance for the first quarter on tap. But the first quarter GDP figures next Monday will likely be more critical to help investors gauge the pace of the economy's recovery.
Canadian Finance Minister Jim Flaherty said on Monday that the country's economy was showing some "good signs", but was still in recession.
Recent Canadian data has shown encouraging evidence of recovery, most recently with Friday's retail sales report, and has helped light a fire under the domestic currency.
However, U.S. data this week may prove to be the driver with a raft of housing data due, including resales and new home sales statistics, with the focus on whether the U.S. housing market is stabilizing, said Guatieri.
Meanwhile, Canadian bonds were mixed, without strong impetus to push in either direction with U.S. Treasuries not trading during Memorial Day.
The benchmark two-year government bond dipped 1 Canadian cent to C$100.19 to yield 1.154 percent, while the 10-year bond rose 8 Canadian cents to C$104.16 to yield 3.26 percent.
The 30-year bond gained 25 Canadian cents to C$117.35 to yield 3.969 percent. (Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)