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* C$ at C$1.0315 vs US$ or 96.95 U.S. cents * Factory sales rose by 1.7 percent in July * Canadian bond prices gain By Leah Schnurr TORONTO, Sept 17 (Reuters) - The Canadian dollar was slightly stronger on Tuesday after receiving an early boost from surprisingly strong factory sales, but anticipation over the U.S. Federal Reserve's two-day meeting kept the currency within a range. Canadian manufacturing sales rose more strongly than expected in July as most sectors gained, while June's sales were also revised up. "We needed this to cling to the hope of a third-quarter rebound," said Mark Chandler, head of Canadian fixed income and currency strategy. But it's still early days, Chandler noted, and more data is needed to fill in the picture. "The bar has been set really high for a rebound in some of this activity data and at least on this one we dodged a bullet," he said. The Canadian dollar was at C$1.0315 to the U.S. dollar, or 96.95 U.S. cents, stronger than Monday's session close of C$1.0325, or 96.85 U.S. cents. The loonie touched a session high of $1.0304 shortly after the data was released. Much of investors' attention was focused south of the border, with the U.S. central bank set to start its two-day policy-setting meeting with a statement to come on Wednesday. Markets largely expect the Fed will begin winding down its massive economic stimulus program. The central bank is currently buying $85 billion in assets a month and investors anticipate the Fed will reduce that by a modest amount. "You've coalesced around a really strong consensus of a modest taper of $10 to $15 billion dollars, so I think it would come as quite a surprise to markets if they chose something different tomorrow," said Chandler. At home, investors will also be watching a speech from Bank of Canada Governor Stephen Poloz scheduled for Wednesday. Prices for Canadian government bonds were higher across the maturity curve, with the two-year bond up 1 and a half Canadian cents to yield 1.258 percent, and the benchmark 10-year bond rose 8 Canadian cents to yield 2.768 percent.