* 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 said. "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 0.605%. (Reporting by Fergal Smith Editing by Nick Zieminski)
Our Standards: The Thomson Reuters Trust Principles.