CANADA FX DEBT-C$ rebounds after hitting 5-yr low as crude bounces
* Canadian dollar ends at C$1.1389, or 87.80 U.S. cents * Bond prices lower across the maturity curve (Adds strategist's comment, updates prices to close) By Alastair Sharp TORONTO, Nov 5 (Reuters) - The Canadian dollar closed higher against the greenback on Wednesday, riding a rise in oil prices to rebound from the five-year low it hit early in the day and bucking a surge in the U.S. dollar to multi-year highs against a raft of other currencies. The loonie, as Canada's currency is colloquially known, had fallen sharply in recent days along with oil prices but investors appeared cautious about the limits of the recent U.S dollar rally ahead of a European Central Bank meeting on Thursday and North American jobs data due on Friday. "In order to extend (C$ weakness) from here we'd need to see very strong data out of the U.S." said Martin Schwerdtfeger, a foreign exchange strategist at TD Securities. He said the loonie could hit C$1.15 if the U.S. nonfarm payrolls gain in October blasts past the 230,000 mark on Friday and the Canadian employment report comes in weak. But if U.S. and Canadian fortunes are reversed it could recover to the low C$1.13s, Schwerdtfeger said. Oil prices jumped on rumors of a pipeline blast in Saudi Arabia and bullish news on U.S. crude inventories. The loonie is sensitive to commodity prices, which have fallen sharply in recent weeks, due to the Canadian economy's dependence on resource extraction and production. "The principal factor that's been driving it in the last two or three sessions has been the sharp move down in crude prices," said Adam Cole, global head of foreign exchange strategy at RBC Capital Markets in London. He pointed out that the early fall in the Canadian currency on Wednesday was echoed by a drop in the Norwegian krone , another resource-reliant currency, and that it was difficult to predict how much further they could fall. "I wouldn't like to try to draw a line under crude prices," he said. The Canadian dollar ended the day at C$1.1389 to the greenback, or 87.80 U.S. cents, stronger than Tuesday's close of C$1.1410, or 87.64 U.S. cents. At one point it hit C$1.1466, its weakest level since July 2009. It has dropped about 7 percent this year, mostly due to falling commodity prices. A Reuters poll released on Wednesday showed that currency strategists expect low oil prices and a tighter monetary policy from the U.S. Federal Reserve to weigh heavily on the loonie in the coming year. The U.S. currency was also boosted by a sweeping win for Republicans in midterm congressional elections on Tuesday. Canadian government bond prices were lower across the maturity curve, with the two-year down 4 Canadian cents to yield 1.003 percent, and the benchmark 10-year down 25 Canadian cents to yield 2.054 percent. (Editing by Peter Galloway)
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