* C$ slightly weaker after Carney testimony
* No change to view that further BOC rate cuts to come
* Bonds mixed with safe-haven bid at long end (Adds details)
By Frank Pingue
TORONTO, Feb 10 (Reuters) - The Canadian dollar remained slightly weaker on Tuesday after testimony from Bank of Canada Governor Mark Carney, with traders nervously awaiting details of a U.S. plan to shore up its ailing banks.
While the domestic currency saw little action during the course of Carney’s comments, it managed to remain comfortably off an overnight low as traders that initially flocked to the greenback overnight due to its status as a safe haven started to take on more risk.
During testimony before a parliamentary finance committee, Carney said the central bank has considerable flexibility to deal with the economy, including room to cut interest rates and expand liquidity operations.
That did little to alter expectations for the Bank of Canada to cut its key interest rate below the current 50-year low of 1.00 percent.
“The markets are pricing in pretty much another 50 (basis) point cut on March and that will keep the Canadian dollar on the defensive in the interim period,” said Derek Holt, an economist at Scotia Capital.
At 10:40 a.m. (1540 GMT), the Canadian unit was at C$1.2222 to the U.S. dollar, or 81.82 U.S. cents, down from C$1.2164 to the U.S. dollar, or 82.21 U.S. cents, at Monday’s close.
That was comfortably off the overnight low of C$1.2336 to the U.S. dollar, or 81.06 U.S. cents.
“The U.S. dollar this morning started to give back some of its gains ahead of the 11 a.m. announcement of the U.S. bailout plan and so that’s contributing to the Canadian dollar strength we’re seeing this morning,” George Davis, chief technical strategist at RBC Capital Markets, said ahead of Carney’s testimony..
In the United States, investors held out hope that Treasury Secretary Timothy Geithner would return some confidence to the financial system when he unveils a plan to relieve banks of money-losing assets.
Meanwhile, Canadian bond prices traded mixed with prices lower at the short end of the curve even as long-term yields fell. U.S. Treasuries rose as uncertainty over details of government rescue plans stoked the safe-haven bid for Treasury debt.
The interest-rate sensitive two-year bond was down 4 Canadian cents at C$102.74 to yield 1.206 percent, while the 10-year bond rose 16 Canadian cents to C$109.56 to yield 3.060 percent.
The 30-year bond rallied 45 Canadian cents to C$121.10 to yield 3.779 percent. (Reporting by Frank Pingue; Editing by Jeffrey Hodgson)