CANADA FX DEBT-C$ holds steady after recent surge

* C$ at C$0.9888 vs US$, or $1.0113
    * Selling pressures weigh after crossing C$0.99 barrier
    * Bond prices mixed

    By Jon Cook
    TORONTO, Aug 16 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday as the
currency's recent surge was being met with some resistance on
behalf of investors.
    On Wednesday the Canadian dollar broke through what
analysts referred to as a key "psychological" level, crossing
the C$0.99 threshold against the greenback, or $1.01, for the
first time since early May.
    "It definitely is feeling the pressure of continued
selling," said C.J. Gavsie, managing director of foreign
exchange sales at BMO Capital Markets.
    After closing on Wednesday at C$0.9890 against the U.S.
dollar, or $1.0111, the Canadian currency weakened back to
C$0.99 overnight. But that move was shortlived, as it rebounded
early on Thursday to hit a session high at C$0.9883 versus the
U.S. dollar, or $1.0118 - its strongest level since May 4.
    "It seems as though investors take their foot off the gas
every time we do reach the previous lows," noted Gavsie.
    The Canadian currency has moved in lock step with the U.S.
dollar, which has been boosted by recent improved economic data.
On Wednesday, data showed U.S. industrial output rose in July at
its fastest pace since April. 
    This followed surprisingly strong U.S. retail sales figures
that damped expectations the Fed will launch another round of
bond buying, or quantitative easing, as early as September.
    At 8:22 a.m. ET (1222 GMT), Canada's dollar was at C$0.9888
against its U.S. counterpart, or $1.0113.
    Gavsie said the currency could weaken further, falling back
towards C$0.9950 as traders bought up more U.S. dollars at lower
    On Thursday, the latest weekly initial claims report and the
Philly Fed survey of factory activity in the mid-Atlantic region
for August will be watched to assess whether the world's largest
economy is regaining momentum in the third quarter.    
    "If there is an economic comeback or slight growth signs in
the U.S., we're going to see the U.S. dollar catch a little bit
more of a lift and back up to parity (with the Canadian
    Meanwhile the Canadian dollar was still seen outperforming
most major currencies on the crosses. On Thursday it hit a fresh
one-month high against the Australian dollar.
    Canadian bond prices were mixed. The two-year bond
 rose 1 Canadian cent to yield 1.244 percent, and the
benchmark 10-year bond fell 7 Canadian cents to
yield 1.962 percent.