TORONTO, May 20 (Reuters) - Canada's currency shot higher on Wednesday, boosted by higher oil prices and domestic inflation data that was seen making it less likely that the Bank of Canada will embark on quantitative easing.
Canada's annual inflation rate in April dropped to a 14-year low of 0.4 percent from 1.2 percent in March on lower energy prices, Statistics Canada said on Wednesday.
However, the core inflation rate fell to 1.8 percent from 2.0 percent in March and was in line with expectations.[ID:nOTT001607]
"The inflation backdrop the Bank of Canada sees, confirmed by this data, is that it does not see a significant deflation risk developing in the Canadian economy so the threat of quantitative easing, is easing," said David Watt, senior currency strategist RBC Capital Markets.
Watt added a firmer price of oil, above $60 a barrel, also supported the currency's rise.
Prior to data, traders in London said there were rumors of the numbers had been leaked and would be weaker than expectations.
The Canadian dollar CAD=D3 rose as much as C$1.1476, or 87.14 U.S. cents, from around C$1.1553, or 86.56 U.S. cents, before the data. The currency finished at C$1.1563 to the U.S. dollar, or 86.48 U.S. cents, on Tuesday.
At 7:53 a.m. (1153 GMT), the Canadian currency was at C$1.1485 to the U.S. dollar, or 87.08 U.S. cents.
Canadian bond prices were largely lower across the curve, following the bigger U.S. Treasury market as prices dipped on rising equities. [ID:nLK111147] (Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)
