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Canadian dollar gains 0.3% against the greenback

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Trades in a range of 1.3679 to 1.3738

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Annual rate of CPI holds steady at 1.7%

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Bond yields edge lower across the curve

By Fergal Smith

TORONTO, June 24 (Reuters) - The Canadian dollar

strengthened against its U.S. counterpart on Tuesday, as

domestic data showed underlying inflation easing in May but not

by enough to bolster expectations for additional interest rate

cuts from the Bank of Canada.

The loonie was trading 0.3% higher at 1.3690 per U.S.

dollar, or 73.05 U.S. cents, after trading in a range of 1.3679

to 1.3738.

Canada's annual inflation rate in May was unchanged from the

previous month at 1.7%, while CPI-trim and CPI-median - two core

measures of inflation closely tracked by the BoC - both eased to

3%, which is the upper-end of the central bank's target range.

"I still think it's too warm to be contemplating rate cuts as

soon as the July meeting but we'll get another report (before

then) and so there's still some residual uncertainty," said

Derek Holt, vice president of capital markets economics at

Scotiabank.

Investors see a 34% chance the BoC resumes its easing campaign

at the next policy announcement on July 30, down from 38% before

the data. Inflation data for June is set for release on July 15.

The safe-haven U.S. dollar fell against a basket of major

currencies after President Donald Trump announced a ceasefire

between Israel and Iran. Data that showed U.S. consumer

confidence declining in June added to pressure on the greenback

even as U.S. Federal Reserve Chair Jerome Powell said the

central bank needs more time to see if rising tariffs drive

inflation higher before considering interest rate cuts.

The price of oil, one of Canada's major exports, was

trading 5.1% lower at $65.04 a barrel on what the market viewed

as lower risk of supply disruptions in the Middle East.

Canadian government bond yields edged lower across the

curve, tracking moves in U.S. Treasuries. The 10-year

was down 1.3 basis points at 3.266%.