TORONTO (Reuters) - Canada's dollar was softer against the U.S. currency on Friday morning, while bonds were lower across the curve, as investors awaited an update on the U.S. economic outlook from U.S. Federal Reserve chairman Ben Bernanke. After a string of weak U.S. data this week, with a second estimate of U.S. second-quarter gross domestic product and a consumer sentiment index still to come on Friday, the market was bracing for the Fed chairman to signal in a speech that the U.S. economy is facing uncertain prospects. New merger and acquisition flows were also noted as Australian toll-road operator Intoll Group (ITO.AX) has recommended a A$3.4 billion takeover bid from Canada Pension Plan Investment Board after Canada's second-biggest pension manager slightly enhanced its earlier offer. "The other commodity currencies are doing fairly well but (the Canadian dollar) is underperforming. I think there was some focus on the M&A deal from CPP buying Australia's Intoll and that's weighed a little bit on Canada," said Camilla Sutton, chief currency strategist at Scotia Capital. "The market's in a bit of a holding pattern waiting for Bernanke's comments." At 8:05 a.m. (1205 GMT), the Canadian dollar was at C$1.0596 to the U.S. dollar, or 94.38 U.S. cents, down from C$1.0567 to the U.S. dollar, or 94.63 U.S. cents, at Thursday's close. The two-year bond was down 1 Canadian cent to yield 1.244 percent, while the 10-year bond fell 15 Canadian cents to yield 2.809 percent. (Reporting by Ka Yan Ng; Editing by Chizu Nomiyama)

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