Canadian Dollar Falls


Canada's dollar fell the most in almost two weeks after a government report showed employers unexpectedly eliminated positions in June.

The decline pared what had been the biggest gain in the currency versus its U.S. counterpart since the week ended June 20. The report increased speculation that the Bank of Canada will keep interest rates unchanged through year-end.

Canada's dollar depreciated 0.7 percent to C$1.0157 per U.S. dollar at 8:19 a.m. in Toronto, from C$1.0085 yesterday. It was the biggest decline since June 30. One Canadian dollar buys 98.45 U.S. cents.

The currency has traded near parity with its U.S. counterpart this year. It touched a 2008 low of C$1.0379 on Jan. 22, and a high of 97.12 cents per U.S. dollar on Feb. 28.

The economy lost 5,000 jobs last month after gaining 8,400 positions in May, Statistics Canada said today in Ottawa. The median forecast of 23 economists surveyed by Bloomberg News was for an increase of 8,000 in June. Canada's unemployment rate rose to 6.2 percent from 6.1 percent.

The central bank will keep borrowing costs unchanged next week, according to the median forecast of 17 economists surveyed by Bloomberg News. Such a decision would maintain the nation's interest-rate advantage over the U.S. at 1 percentage point.

``Very high crude oil and gasoline prices are a negative for Canadian consumers and prompting employers to lay off workers,'' said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon. ``In terms of growth-rate differentials and interest-rate differentials, the outlook looks negative for Canada.''

Crude oil reached a record today of $145.98 per barrel.

The world's eighth-largest economy shrank in the first quarter. Canada's central bank left borrowing costs unchanged at 3 percent last month after four cuts starting in December. Policy makers next meet July 15.


TradingEconomics.com, Bloomberg
7/11/2008 6:52:18 AM