Canadian Dollar Drops Near Year Low on Unexpected Job Losses

By Cordell Eddings

Aug. 8 (Bloomberg) -- Canada's dollar fell to the lowest in almost a year after a government report showed employers unexpectedly shed jobs for a second straight month, raising speculation that the central bank may cut borrowing costs.

The currency dropped 1.2 percent against the U.S. dollar, the biggest decline since March 20. Employers reduced payrolls by 55,200 positions, Statistics Canada said in Ottawa.

The currency fell to C$1.0663 per U.S. dollar at 8:15 a.m. in Toronto, from $1.053 yesterday, the lowest since last August. One Canadian dollar buys 93.79 U.S. cents.

``This is very worrisome,'' said Michael Gregory, a senior economist in Toronto at the bank of Montréal. ``The expected slowdown in the Canadian economy is happening, and maybe happening a little more steeply even than the bank of Canada was expecting.''

After gaining 17 percent in 2007, the Canadian dollar is down 6.4 percent in 2008 amid a shrinking economy the drop in oil prices. It's one of five of the 16 most-widely traded currencies to drop against the U.S. greenback, joining the New Zealand dollar, South Korean won, South African rand and British pound.

Economist had anticipated 5,000 new jobs were added in July, according to the median of 22 estimates in a Bloomberg survey.

`` A weak number like this is a lot more than what people were thinking,'' said Gregory. ``Clearly it has weight to the evidence that the bank could cut rates before the end of the year.''

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net