CANADA FX DEBT-C$ hits 5-yr low as falling crude keeps applying pressure

Wed Nov 5, 2014 10:04am EST
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* Canadian dollar at C$1.1438, or 87.43 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, Nov 5 (Reuters) - The Canadian dollar touched a
fresh five-year low against its U.S. counterpart on Wednesday as
falling crude oil prices pulled the currency to a fourth day of
sharp losses.
    The loonie, as Canada's currency is colloquially known, is
sensitive to commodity prices due to the large portion of the
economy dependant 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 fall in the Canadian currency was
being echoed by a drop in the Norwegian krone,
another resource-reliant currency. 
    Weak economic data from China and Europe kept the pressure
on crude prices, which have fallen by more than a third since
June, and Cole said 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 was last trading at C$1.1438 to
the greenback, or 87.43 U.S. cents, weaker 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 fallen 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. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3 Canadian
cents to yield 0.997 percent and the benchmark 10-year
 was down 18 Canadian cents to yield 2.046 percent.

 (Editing by Peter Galloway)