CANADA FX DEBT-C$ slides vs U.S. dollar as federal election in focus

* Canadian dollar at C$1.2842 or 77.87 U.S. cents

* Bond prices higher across the maturity curve

* Spotlight on federal election

NEW YORK, Sept 20 (Reuters) - The Canadian dollar fell against the U.S. currency on Monday, with investors focused on a federal election two years ahead of schedule that will determine whether Prime Minister Justin Trudeau stays in power.

Trudeau may well prevail in Monday's election but he could lose his bid for a parliamentary majority after a tough campaign that dashed hopes for a convincing win. The incumbent Canadian leader has a minority administration that forced him to rely on other parties and make policy compromises to govern.

"If the election does result in another minority government led by the Liberals (Trudeau's party), well then that's no different from today and shouldn't have much of an impact on CAD," wrote Marshall Gittler, head of investment research at BD Swiss Group.

"And even a change in government might not be all that big a deal; fiscal policy is likely to remain expansive as none of the major parties has been pushing for a pullback in government spending, while monetary policy will of course be unchanged."

* At 9:01AM EST (1301 GMT), the Canadian dollar was trading lower at C$1.2842 to the greenback, or 77.87 U.S. cents.

* The currency's strongest level of the session was C$1.276, while its weakest level was C$1.2895.

* U.S. crude prices were down 1.68% to $70.76 a barrel, while Brent crude lost 1.43% to $74.26.

* Canadian government bond yields were lower across the curve, with the 10-year down -5.5 basis points at 1.227%.

* The Canada-U.S. two-year bond spread was down at 23.62 basis points, while the 10-year spread was up at 8.78 basis points. (Reporting by Gertrude Chavez-Dreyfuss Editing by Mark Potter)

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