* Canadian dollar falls 0.2% against the greenback
* Canada's annual inflation rate falls 0.4% in May
* Price of U.S. oil decreases 1.1%
* Canadian bond yields trade mixed across a flatter curve
By Fergal Smith
TORONTO, June 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices fell and as domestic data showing a surprise annual decline in the consumer price index supported expectations for continued low interest rates.
Canada's annual inflation rate fell by 0.4% in May, negative for the second month in row, as the COVID-19 pandemic pushed gasoline prices lower year-over-year, Statistics Canada said. Analysts had forecast a flat rate in May. total and core CPI growth remain supportive of the BoC's all-in policy stance," said Ryan Brecht, a senior economist at Action Economics.
Tiff Macklem, in his first public appearance as governor of the Bank of Canada, said on Tuesday the bank remained focused on using its policy tools, including low interest rates, to support the Canadian economy's recovery from the COVID-19 pandemic. Canadian dollar CAD= was trading 0.2% lower at 1.3573 to the greenback, or 73.68 U.S. cents. The currency, which has recovered from a two-week low on Monday at 1.3685, traded in a range of 1.3512 to 1.3593.
Canada risks slowing the pace of economic recovery as it largely leans on repayable loans to help companies ride out the coronavirus crisis, rather than grant programs that are favored by the United States, economists say. Canadian government will unveil a "fiscal and economic snapshot" on July 8 to show much money it has spent combating the coronavirus outbreak, Prime Minister Justin Trudeau said. price of oil, one of Canada's major exports, was pressured by concerns over fuel demand due to fresh outbreaks of COVID-19. U.S. crude oil futures CLc1 settled 1.1% lower at $37.96 a barrel. government bond yields were mixed across a flatter curve, with the 10-year CA10YT=RR down 1.2 basis points at 0.538%. On Monday, the 10-year yield hit a one-month low at 0.468%.