CANADA FX DEBT-Canada dollar drops to over 5-yr low on oil's slide
* Canadian dollar at C$1.1410 or 87.64 U.S. cents * Bond prices higher across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr OTTAWA, Nov 4 (Reuters) - The Canadian dollar fell to a more than five-year low against the greenback on Tuesday, piercing the C$1.14 level on a drop in oil prices and dovish comments from the Bank of Canada. Data that showed Canada had an unexpected trade surplus in September helped the loonie retrace some of its decline, pulling it back from a session low touched just before the trade figures were released. Still, the Canadian dollar was hit hard by the sharp drop in oil prices after Saudi Arabia cut sales prices to the United States. U.S. crude settled down $1.59 at $77.19 a barrel. It's "the general consensus from the market that Canada is linked to oil and oil has been tumbling, so that's what's led to the decline in the value of the loonie," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. The loonie was also pressured by comments from the head of the Bank of Canada, who said the central bank will continue with monetary stimulus despite risks from high household debt and a hot housing market. The remarks by bank Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins before the House of Commons finance committee added to the dovish tone policymakers have struck this week. Poloz said on Monday the risks from a new downturn in the economy and inflation are less easy to handle that upside surprises. "For loonie traders, they were a little bit taken aback about how dovish Bank of Canada Governor Poloz and Wilkins have been. I don't think that can really be understated," said Amo Sahota, director at Klarity FX in San Francisco. The Canadian dollar ended the North American session at C$1.1410 to the greenback, or 87.64 U.S. cents, weaker than Monday's close of C$1.1357, or 88.05 U.S. cents. Risk appetite in the markets was also dampened after the European Commission cut its forecasts for the euro zone's economy and said the region would need another year to reach even a modest level of economic growth. The Canadian currency touched a session low of C$1.1429 against the U.S. dollar in morning trade, its lowest level since July 2009. Technically the currency pair faces resistance around C$1.1440, Sahota said. "If it doesn't hold and the market rallies above, then I think there will be some fresh Canadian dollar shorts in the marketplace joining in and we could get yet another acceleration," he said. Canadian government bond prices were higher across the maturity curve, with the two-year up 1-1/2 Canadian cents to yield 0.985 percent and the benchmark 10-year up 15 Canadian cents to yield 2.026 percent. (Editing by Peter Galloway)
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