* Ends at C$1.0234 per US$, or 97.71 U.S. cents
* Soft U.S. retail data pressures greenback
* Commodities mixed but offer some support
* Bonds prices flat to higher (Updates to close, adds quotes)
By Jennifer Kwan
TORONTO, Jan 14 (Reuters) - The Canadian dollar shot to a three-month high against the U.S. currency on Thursday as the greenback fell on soft U.S. economic data and the Canadian unit gained momentum after piercing key technical levels.
The Canadian currency rose as far as C$1.0225 to the U.S. dollar, or 97.80 U.S. cents, its highest level in three months. The move was aided by a solid performance among commodity-linked currencies such as the Australian dollar, but gained steam as the Canadian dollar firmly pierced the C$1.0250 to C$1.0300 levels, said Matthew Strauss, senior currency strategist at RBC Capital Markets.
"The underlying global backdrop supported commodity-based currencies but the (Canadian dollar's) move against the U.S. dollar had more to do with important technical levels being broken," he said.
Market watchers will now wait to see if the currency is able to pierce an Oct. 15 high of C$1.0207 to the U.S. dollar, a signal that it could quickly reach parity.
The Canadian dollar ended at C$1.0234 to the U.S. dollar, or 97.71 U.S. cents, up from Wednesday's finish at C$1.0306 to the U.S. dollar, or 97.03 U.S. cents.
Thursday's move higher came as the U.S. dollar fell against the yen after data showed U.S. December retail sales unexpectedly fell, supporting the view that the Federal Reserve will keep interest rates on hold in the foreseeable future. [FRX/]
The Australian dollar rose against the yen and hit a two-month high versus the U.S. dollar after data showed Australia's jobless rate at an eight-month low, adding to the case for higher interest rates there. [ID:nSGE60C06P]
U.S. stocks, which finished the day higher and are typically seen as a barometer of risk appetite, also helped to support the Canadian dollar. [.N]
BOND PRICES FLAT TO HIGHER
Canadian bond prices were little changed at the short end and higher at the long end, where it moved in tandem with the bigger U.S. Treasury market.
U.S. treasuries climbed on the weaker than expected U.S. economic data and extended gains after a well-received auction of 30-year debt, said Fergal Smith, managing market strategist at Action Economics. [US/]
"Yields have backed up recently, particularly at the long end, but the support for the auction showed there is plenty of demand for yields at these high levels," said Smith.
Smith also noted the performance at the front end of the curve lagged.
"While the belly and long end of the curve rallied, the front of the curve lagged so there was flattening in the curve and that has been counter to the recent trend. That may be partly due to anxiety ahead of the Bank of Canada policy announcement," he said.
The central bank is widely expected to leave rates unchanged next week, but "the market is starting to calibrate when the bank will start to tighten," Smith said.
The rate decision is scheduled for Tuesday. Most of Canada's primary securities dealers are forecasting the bank will maintain its conditional promise to keep its key interest rate at its near-zero level through the second quarter. [ID:nN14233037]
The two-year Canada bond <CA2YT=RR> sagged 6 Canadian cents at C$99.88 to yield 1.318 percent, while the 30-year bond <CA30YT=RR> climbed C$1.12 to C$115.05 to yield 4.082 percent. (Editing by Rob Wilson)