* C$ at C$1.0310 vs US$, or 96.99 U.S. cents * Flat domestic retail sales data prompts fall * Fed testimony and minutes on tap, likely to move the pair By Alastair Sharp TORONTO, May 22 (Reuters) - The Canadian dollar took a hit from unexpectedly soft domestic retail sales data, sliding to a 10-week low against the U.S. dollar on Wednesday ahead of key testimony from U.S. Federal Reserve Chairman Ben Bernanke. The value of domestic retail sales was unchanged mostly due to a drag from lower gasoline prices, while volumes were higher. "The underlying reality is that whilst sales values were undermined by the influence of gasoline sales, the volumes were reasonably OK," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London. "There was always a case to fade the knee-jerk rally in dollar-CAD on the numbers." The loonie, as Canada's currency is colloquially known, fell to its weakest level versus its U.S. counterpart in more than two months after the data, but later pared those losses to trade at C$1.0310 to the greenback, or 96.99 U.S. cents. It closed Tuesday's North American session at C$1.0268, or 97.39 U.S. cents. "Now it is a case of counting down the minutes until Mr Bernanke speaks," CIBC's Stretch said. The Fed chairman is set to testify before a congressional committee at 10 a.m. (1400 GMT), while the central bank will later in the day release the minutes of its most recent meeting. Stretch said investors looking for the Fed to pull back on its asset-buying program may be disappointed initially with a message that an improving data landscape is key. He expects the pair to trade no higher than the C$1.0330 level and said there would be renewed interest in buying the U.S. dollar if it approaches C$1.0240. The price of Canadian government debt was mixed, with longer-dated maturities slipping and the short end marginally higher. The two-year bond was up just over 1 Canadian cent to yield 1.002 percent, while the benchmark 10-year bond added 3 Canadian cents to yield 1.909 percent.