Canada's Dollar Falls

Canada's dollar fell after a government report showed the economy unexpectedly shrank in the first quarter, fueling speculation the central bank will cut borrowing costs next month.

The Canadian currency depreciated as the data suggested the U.S.-led weakness was spilling over to Canada. The nation's central bank lowered the target lending rate by a half- percentage point to 3 percent on April 22. Borrowing costs have been cut four times since December from 4.5 percent. Policy makers meet on June 10 to decide on rates.

Canada's dollar fell 0.9 percent to 99.66 Canadian cents per U.S. dollar at 8:38 a.m. in Toronto, from 98.77 yesterday. One Canadian dollar buys $1.0037.

Gross domestic product, the sum of all goods and services produced in Canada, shrank at an annual pace of 0.3 percent from January to March, after 0.8 percent growth in the previous period, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News had forecast 0.4 percent growth.

Canada, Bloomberg
5/30/2008 6:39:56 AM