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The Canadian dollar CADUSD edged higher against the greenback on Wednesday, with the currency giving back much of its earlier gain as worries about the global economic outlook offset data showing cooler U.S. inflation.

The annual increase in U.S. consumer prices slowed to below 5% in April for the first time in two years, which could help convince the Federal Reserve to pause its interest rate hiking campaign.

With inflation easing, investors have become more focused on prospects for economic growth, said Adam Button, chief currency analyst at ForexLive.

“The market just can’t shake the feeling that a downturn in the global economy is imminent,” Button said.

Canada is a major producer of commodities, so the loonie tends to be particularly sensitive to the global economic outlook. The price of oil settled 1.6% lower at $72.56 a barrel.

The Canadian dollar was trading 0.1% higher at C$1.3380 to the greenback, or 74.74 U.S. cents, after moving in a range of 1.3336 to 1.3414.

Domestic data showed the value of building permits rising 11.3% in March.

India and Canada aim to seal an initial agreement this year to increase their trade and expand investment while setting out a mechanism to deal with disputes, they said in a statement.

Canadian government bond yields eased across the curve.

The 10-year fell 4.9 basis points to 2.907%, while the gap between it and its U.S. equivalent narrowed by 2.5 basis points to about 54 basis points in favour of the U.S. bond.