CANADA FX DEBT-C$ weakens as inflation miss supports BoC's easing stance

    * Canadian dollar falls 0.2% against the greenback
    * Canada's annual inflation rate falls 0.4% in May
    * Price of U.S. oil decreases 1.5%
    * 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
domestic data showed a surprise annual decline in the consumer
price index.
    The loonie        was trading 0.2% lower at 1.3567 to the
greenback, or 73.71 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 1.3571.
    Canada's annual inflation rate fell 0.4% in May, negative
for the second month in row, as the COVID-19 pandemic pushed
gasoline prices lower year-over-year, outweighing a jump in food
costs, Statistics Canada said. Analysts had forecast a flat rate
in May.             
    "Tame 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 remains focused on
using its policy tools, including low interest rates, to support
the Canadian economy's recovery from the COVID-19 pandemic.
    The price of oil, one of Canada's major exports, fell on
fears over fresh outbreaks of COVID-19, but prices drew some
support from stimulus measures and positive tests of a drug that
could save some critically ill patients. U.S. crude oil futures
       were down 1.5% at $37.80 a barrel.             
    Canadian government bond yields were mixed across a flatter
curve, with the 10-year             down less than a basis point
at 0.541%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)