* C$ falls to 95.45 U.S. cents
* Bonds prices firm across curve
* Bernanke says Fed to act if soft U.S. recovery falters (Updates to close)
By Ka Yan Ng
OTTAWA, July 21 (Reuters) - The Canadian dollar ended lower against the U.S. currency on Wednesday as equity markets and oil prices extended their declines after the U.S. Federal Reserve said the U.S. economy faces "unusually uncertain" prospects.
Canadian bond prices added to their earlier gains, helped by the sharp declines in equity markets, as the U.S. central bank's economic outlook suggested interest interest rates would stay low for some time.
Fed Chairman Ben Bernanke, in prepared testimony to the U.S. Senate Banking Committee, also said that the bank was ready to take further steps to bolster growth if needed. [ID:nWALLIE6DU]
His remarks were largely in line with the minutes of a recent bank policy meeting, but today's comments served to underscore market worries about the global economic outlook and further soured investor sentiment towards riskier assets.
The Canadian dollar traced declines on North American equity markets, which skidded 1 percent, as well as the softening price of oil.
The currency CAD=D4 closed at C$1.0477 to the U.S. dollar, or 95.45 U.S. cents, not far off its session low, and down from Tuesday's finish at C$1.0448 to the U.S. dollar, or 95.71 U.S. cents.
"All he really did was repeat just what the data was telling us and, really, what the last Federal Reserve minutes were," said Sacha Tihanyi, currency strategist at Scotia Capital. "(But) the most recent equity weakness did cause the (currency's) biggest weakening spurt of the day."
The currency slumped as low as C$1.0503 to the U.S. dollar, or 95.21 U.S. cents, following Bernanke's remarks, a long and steep reversal from its best level overnight when it had jumped almost a penny to close to a one-week high at C$1.0351 to the U.S. dollar, or 96.61 U.S. cents.
"The Canadian dollar continues to trade with some volatility but really in a very well-defined sideways range between C$1.03 and C$1.07. We're more or less in the middle of it," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
A weak tone to Canadian wholesale activity also weighed, as data released Wednesday morning showed wholesale trade unexpectedly slipped 0.1 percent in May from April. [ID:nN2136413]
Looking ahead, markets will be looking at Canadian retail sales data for May on Thursday, as well as several reports on U.S. housing. ECON
Also on Thursday, the Bank of Canada should provide more details on its view of the economy in its Monetary Policy Report, which will be followed by a press conference by Governor Mark Carney.
"We've already seen some telegraphing of what the bank thinks," said Spitz. "Ultimately, it will be more or less dovetailing with Carney's comments that the domestic landscape is likely not to go unscathed with respect to the the global backdrop ... which is one of uncertainty."
The two-year bond CA2YT=RR rose 17 Canadian cents to yield 1.515 percent, while the 10-year bond CA10YT=RR gained 33 Canadian cents to yield 3.157 percent.
Canadian bonds were mixed against U.S. Treasury issues, with short-dated issues outperforming and long-dated debt underperforming. The Canadian 10-year bond was 28.1 basis points above the comparable U.S. bond, compared with 23.9 basis points in the previous session. (Reporting by Ka Yan Ng; editing by Rob Wilson)