(Adds strategist comment and details throughout; updates prices) * 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 year. 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 Economics. 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)
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