CANADA FX DEBT-Loonie firms as investors cheer firm domestic data

 (Adds strategist comment and details throughout; updates
    * Canadian dollar rises 0.3% against the greenback
    * Canada's annual inflation rate falls to 2.0% in June
    * U.S. oil futures decrease by 1.5%
    * Canada's 10-year yield hits a 12-day low at 1.532%

    By Levent Uslu
    TORONTO, July 17 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Wednesday as the
greenback broadly fell and domestic data supported the view the
economy is recovering after a slow patch at the turn of the
    The U.S. dollar        softened against most major
currencies in step with lower U.S. bond yields and expectations
the Federal Reserve would lower interest rates, reversing some
of the prior day's gains tied to stronger-than-forecast retail
sales data.             
    A combination of a weaker U.S. dollar coupled with "good"
Canadian economic data strengthened the loonie, said Ronald
Simpson, managing director of global currency analysis at Action
    Lower energy prices helped push down Canada's annual
inflation rate in June to 2.0% from 2.4% in May, while factory
sales rose by 1.6% in May, the most in a year, data from
Statistics Canada showed.             
    "I think the narrative that we've been talking about is
still broadly in place, that growth in Canada is bouncing back
after a soft winter and inflation pressures are still right
around 2%," said Nathan Janzen, a senior economist at Royal Bank
of Canada.
    At 3:16 p.m. (1916 GMT), the Canadian dollar          was
trading 0.3% higher at 1.3045 to the greenback, or 76.66 U.S.
cents. The currency, which last Friday notched a near nine-month
high at 1.3018, traded in a range of 1.3035 and 1.3093.
    The gain for the loonie came even as the price of oil, one
of Canada's major exports, fell for the third straight day after
U.S. government data showed large builds in refined product
stockpiles. U.S. crude futures        settled 1.5% lower at
$56.78 a barrel.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries after data showed
weakness in the U.S. housing market and as concerns about the
trade war between the United States and China boosted demand for
safe-haven debt.             
    The two-year            rose 6 Canadian cents to yield
1.527% and the 10-year             was up 48 Canadian cents to
yield 1.535%.
    The 10-year yield touched its lowest intraday since July 5
at 1.532%.

 (Reporting by Levent Uslu; Additional reporting by Fergal
Smith; Editing by Peter Cooney)