* Bond prices slip after two-days of big gains (Updates to midday)
OTTAWA, Aug 12 (Reuters) - The Canadian dollar turned slightly firmer against the U.S. currency on Thursday, reclaiming ground it had lost because of growing doubts about the outlook for the global economy.
It approached the key level of C$1.05 to the U.S. dollar, but when it did not break through this mark, it gained a little momentum higher with no major Canadian economic releases scheduled for the day.
At 1:10 p.m. (1710 GMT), the currency CAD=D4 was at C$1.0424 to the U.S. dollar, or 95.93 U.S. cents, up moderately from Wednesday’s finish at C$1.0453 to the U.S. dollar, or 95.67 U.S. cents.
“Overall the Canadian dollar is outperforming today,” said Tyson Wright, senior foreign exchange trader at Custom House, a currency services firm in British Columbia.
“It’s consolidated right under that C$1.05 mark. I think the relative economics are coming into play right now.”
Wright said the U.S. economy was a concern and, because the United States is by far Canada’s biggest trading partner, the Canadian dollar could come under pressure in the medium term.
The currency slid as low as C$1.0494 to the U.S. dollar, or 95.29 U.S. cents. Wright noted “a lot” of resistance around the C$1.0475-C$1.05 area, but said the currency remains in the broad range of C$1.01-C$1.0750, where it has been for months.
“We’re right in the middle of that. That seems pretty appropriate as a tug of war between the risk and the economic fundamentals. On balance, that should keep us contained in this range,” he said.
The currency had slumped for two straight sessions, falling to a three-week low, as fears mounted about the global recovery and the struggling U.S. economy in particular. A spate of weak data from China added to worries about slowing global growth.
“There are a number of influences that are somewhat conflicted in terms of where to push the Canadian dollar in terms of its breakout. A week ago, it was below C$1.02 and now it’s looking at potentially trading above C$1.05,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.
Piercing C$1.05, he added, could send the currency as weak as C$1.0587 to the U.S. dollar, or 94.46 U.S. cents, a level last seen on July 20.
“At the moment, given the global backdrop, it appears as though the Canadian dollar is likely headed for additional weakness, but that could easily change tomorrow in the event that (U.S.) CPI and retail sales exceed expectations,” Spitz said.
Canadian bond prices were weaker across the curve on profit-taking, following big gains made over the last several days on the back of the dimming world economic outlook.
The two-year bond CA2YT=RR dipped 3 Canadian cents to yield 1.354 percent, while the 10-year bond CA10YT=RR lost 27 Canadian cents to yield 3.001 percent.
In offering news, the city of Toronto sold C$200 million of debt in a reopening of an existing issue, according to a term sheet seen by Reuters on Thursday. [ID:nN12114591] (Reporting by Ka Yan Ng in Ottawa and Claire Sibonney in Toronto; editing by Rob Wilson)