CANADA FX DEBT-C$ firms modestly but stays in range; CPI in focus

* Canadian dollar at C$1.0893 or 91.80 U.S. cents
    * Bond prices lower across the maturity curve

 (Updates direction, adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, May 22 (Reuters) - The Canadian dollar firmed
modestly against the greenback on Thursday, shrugging off weak
retail sales data while clinging to a narrow trading range.
    The loonie has largely traded sideways so far in May, and
analysts expect it to stay comfortable around either side of
C$1.10 as the market weighs Canadian economic data that has
generally been modestly improving against the Bank of Canada's
neutral policy stance.
    Canadian retail sales slipped 0.1 percent in March, falling
short of expectations for a 0.3 percent gain, though February's
figures were revised higher. 
    The loonie weakened briefly after the data was released,
before reversing later in the session. After the retail sales
figures, focus turned to Friday's consumer price index report,
which could spur more currency reaction.
    While the retail sales figure normally would have been taken
as a negative, the one-time impact of unusually harsh winter
weather may have lessened the blow, said Don Mikolich, executive
director of foreign exchange sales at CIBC World Markets in
    "There's no catalyst for now, so the range remains narrow,"
Mikolich said.
    The Canadian dollar ended the North American
session at C$1.0893 to the greenback, or 91.80 U.S. cents,
firmer than Wednesday's close of C$1.0915, or 91.62 U.S. cents.
The currency traded as low as C$1.0932 immediately after the
retail data was released.
    Data showed the contraction in China's manufacturing sector
in May slowed to its weakest pace this year. The Canadian dollar
is often sensitive to economic news from China, which is a major
consumer of natural resources. 
    For the currency pairing to move significantly from current
levels, the catalyst will likely need to come from a stronger
U.S. dollar as the economic recovery south of the border gains
speed and the Federal Reserve continues to wind down its
accommodative monetary policy, said Mazen Issa, senior Canada
macro strategist at TD Securities in Toronto.
    "At the end of the day, for the U.S. dollar-Canadian dollar
to move higher, it's really going to have to come from the U.S.
leg of the pair," he said.
    "That soft narrative backdrop for Canada has pretty much
been well advanced at this point, so you need to have that U.S.
story really kick in."
    Canadian government bond prices were lower across the
maturity curve, with the two-year off 0.7 of a
Canadian cent to yield 1.053 percent and the benchmark 10-year
 down 17 Canadian cents to yield 2.323 percent.

 (Editing by Peter Galloway)