* Canadian dollar rises 0.1% against the greenback * Canada's annual inflation rate rises to 0.7% in October * Price of U.S. oil increases 1.2% * Canadian bond yields trade mixed across a flatter curve By Fergal Smith TORONTO, Nov 18 (Reuters) - The Canadian dollar rose against the greenback on Wednesday as positive news on a COVID-19 vaccine boosted oil prices and after data showing higher underlying inflation supported the Bank of Canada's decision to cut back on emergency stimulus measures. Canada's annual inflation rate rose to 0.7% in October from 0.5% in September, mainly on higher food prices, Statistics Canada said, while the average of three underlying measures that are closely watched by the Bank of Canada was up at 1.8% year-over-year from 1.7%. "Core inflation has been very resilient over the pandemic period so far," said Derek Holt, vice president of capital markets economics at Scotiabank. It justifies the Bank of Canada "backing away from some of the stimulus measures so far," Holt said. Last month, the central bank reduced its bond-buying program to C$4 billion per week from C$5 billion. Some other emergency measures to support financial markets during the coronavirus crisis have been wound down. The price of oil, one of Canada's major exports, rose on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported. U.S. crude prices were up 1.2% at $41.94 a barrel, while the Canadian dollar was trading 0.1% higher at 1.3090 to the greenback, or 76.39 U.S. cents. The currency traded in a range of 1.3056 to 1.3117. Canadian home prices rose 1.3% in October from September, the Teranet-National Bank Composite House Price Index showed. That was the strongest gain for an October in the index's 22 years. Canada's retail sales report for September is due on Friday. Canadian government bond yields were mixed across a flatter curve, with the 10-year down 4.2 basis points at 0.696%. (Reporting by Fergal Smith Editing by Nick Zieminski)
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