* C$ falls to lowest level since Oct. 8
* Lower oil prices also weigh on currency
* Bond prices lower across the curve
By Frank Pingue
TORONTO, Oct 21 (Reuters) - Canada's currency fell against the U.S. dollar on Wednesday as traders overseas got a chance to react to the Bank of Canada warning that a strong domestic currency was undermining economic recovery.
A slide in the price of oil, a key Canadian export, toward $78 a barrel given a bigger-than-expected increase in crude oil inventories was also weighing on the currency. [O/R]
It was enough to send Canada's dollar down to C$1.0578 to the U.S dollar, or 94.654 U.S. cents, its lowest since Oct. 8. The slide followed a drop of near 2 U.S. cents on Tuesday when the Bank of Canada suggested it will not follow Australia in hiking interest rates quickly. [ID:nN19231469]
"You do have this little matter of the Bank of Canada, which London didn't get a chance to react to that much yesterday," said David Watt, senior currency strategist at RBC Capital Markets. "We're also in the period between the Bank of Canada statement and the MPR, when the market has to reassess if it missed something."
On Thursday, the Bank of Canada will release it Monetary Policy Report, followed by a news conference with Governor Mark Carney.
At 7:40 a.m. (1140 GMT), the Canadian unit was at C$1.0575 to the U.S. dollar, or 94.56 U.S. cents, down from C$1.0508 to the U.S. dollar, or 95.17 U.S. cents, at Tuesday's close.
Domestic bond prices, with no Canadian data to consider, were stuck lower across the curve alongside a weaker U.S. Treasury market. (Editing by Padraic Cassidy)