* Canadian dollar falls 0.2% against the greenback * Canada's annual inflation rate falls 0.4% in May * Price of U.S. oil decreases 1.5% * Canadian bond yields trade mixed across a flatter curve By Fergal Smith TORONTO, June 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices fell and domestic data showed a surprise annual decline in the consumer price index. The loonie was trading 0.2% lower at 1.3567 to the greenback, or 73.71 U.S. cents. The currency, which has recovered from a two-week low on Monday at 1.3685, traded in a range of 1.3512 to 1.3571. Canada's annual inflation rate fell 0.4% in May, negative for the second month in row, as the COVID-19 pandemic pushed gasoline prices lower year-over-year, outweighing a jump in food costs, Statistics Canada said. Analysts had forecast a flat rate in May. "Tame total and core CPI growth remain supportive of the BoC's all-in policy stance," said Ryan Brecht, a senior economist at Action Economics. Tiff Macklem, in his first public appearance as governor of the Bank of Canada, said on Tuesday the bank remains focused on using its policy tools, including low interest rates, to support the Canadian economy's recovery from the COVID-19 pandemic. The price of oil, one of Canada's major exports, fell on fears over fresh outbreaks of COVID-19, but prices drew some support from stimulus measures and positive tests of a drug that could save some critically ill patients. U.S. crude oil futures were down 1.5% at $37.80 a barrel. Canadian government bond yields were mixed across a flatter curve, with the 10-year down less than a basis point at 0.541%. (Reporting by Fergal Smith; editing by Jonathan Oatis)
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