* C$ closes at C$1.0545 per U.S. dollar
* Canada CPI up after 4-month decline
* Bonds flat as new supply hits market (Recasts to close)
By Frank Pingue
TORONTO, Nov 18 (Reuters) - Canada's currency fell for the second straight session on Wednesday after rising earlier in the session to nearly its strongest in about a month, reversing course when it failed to crack a key technical level.
The Canadian dollar rallied as high as C$1.0450 to the U.S. dollar, or 95.69 U.S. cents, early in the session, but experts said its failure to pierce the technical level opened the door to a wave of selling.
"Overnight and into early morning trading the market was testing C$1.0450 but it couldn't break below that and as a result we saw buying interest return and push up (the U.S. dollar)," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
Strauss also said a general lack of risk appetite in the listless session weighed on the currency as North American equities finished the session largely unchanged.
The Canadian dollar closed at C$1.0545 to the U.S. dollar, or 94.83 U.S. cents, down from C$1.0511 to the U.S. dollar, or 95.14 U.S. cents, at Tuesday's close.
Canada's currency had move little after data that showed consumer prices in Canada rose in October since the report is not expected to sway the Bank of Canada from holding its key interest rate at a record low until mid-2010. [ID:nN1892543]
Helping to cushion the currency's fall were expectations that U.S. interest rates will remain low for some time. Such a scenario tends to encourage global investors to look for better returns from riskier trades such as high-yielding currencies.
The next batch of Canadian data due on Thursday includes a look at wholesale trade figures for September and the leading indicator for October.
BONDS PRICES DIP
Canadian bond prices finished flat to lower across the curve given supply concerns, while a skid in the bigger U.S. Treasury markets also weighed on domestic bond prices.
The Bank of Canada's C$3 billion auction of 2.5 percent government bonds yielded an average 2.732 percent, which some experts said did not garner much attention given a rash of other supply. [ID:nTOR006939]
"There were so many deals coming down the pipeline that they took priority," said Sheldon Dong, fixed income analyst TD Waterhouse Private Investment. "Overall, performance today was just weighed primarily by supply."
Among the new issues Dong mention were offerings by Canada Mortgage Housing Trust, the Province of Nova Scotia and YPG Holdings. [CAN-TNC]
The two-year Canada bond dropped 1 Canadian cent to C$99.88 to yield 1.313 percent, while the 30-year bond fell 68 Canadian cents to C$117.60 to yield 3.945 percent.
Canadian bonds outperformed U.S. Treasuries across much of the curve. The Canadian 10-year yield was 4.50 basis points above its U.S. counterpart, compared with 4.90 basis points on Tuesday. (Editing by Frank McGurty)