CANADA FX DEBT-Canadian dollar rises as investors shrug off deflationary data

    * Canadian dollar rises 0.5% against the greenback
    * Canada's annual inflation rate fell by 0.2% in April
    * Price of U.S. oil increases 2.4%
    * Canadian bond yields rise across a steeper curve

    By Fergal Smith
    TORONTO, May 20 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday as hopes for global
economic recovery supported equity markets and investors
shrugged off domestic data showing deflationary pressures.
    Canada's annual inflation rate fell by 0.2% in April, the
first time it has hit negative territory since 2009, as the
coronavirus pandemic slashed energy prices, Statistics Canada
    "As the economy starts to open back up again and conditions
return then so will the inflationary pressures," said Simon
Harvey, FX market analyst for Monex Europe and Monex Canada.
    "For the Bank of Canada, it's a case of economic activity,
the output gap and the labor market at the moment so I don't see
too much volatility coming from the CPI numbers in financial
markets," Harvey said.
    Bank of Canada Deputy Governor Timothy Lane is due to speak
at 2 p.m. (1800 GMT). Since March, the central bank has slashed
interest rates to near zero and begun for the first time a
large-scale bond-buying program.
    The Canadian dollar          was trading 0.5% higher at
1.3871 to the greenback, or 72.09 U.S. cents. The currency,
which notched on Tuesday a near three-week high at 1.3865,
traded in a range of 1.3870 to 1.3960.
    Separate domestic data showed that wholesale trade decreased
by 2.2% in March from February, which was a smaller drop than
analysts had expected.             
    Global shares          rose as investors clung to hopes of a
recovery from a coronavirus-fuelled slump amid signs of more
stimulus for ailing sectors.             
    The price of oil, one of Canada's major exports, rose on
signs of improving demand and a drawdown in U.S. crude
inventories. U.S. crude oil futures        were up 2.4% at
$32.71 a barrel.             
    Canadian government bond yields were higher across a steeper
curve, with the 10-year             up 1.3 basis points at

 (Reporting by Fergal Smith
Editing by Nick Zieminski)