TORONTO, Aug 20 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Wednesday, with the currency holding near an earlier three-month low after it was pressured the previous day by inflation data that raised expectations the Bank of Canada would resume its easing campaign.
The loonie was trading nearly unchanged at 1.3865 per U.S. dollar, or 72.12 U.S. cents, after earlier touching its weakest intraday level since May 22 at 1.3883 as USD-CAD briefly eclipsed the August 1 peak at about 1.3880.
"Today is obviously fairly quiet. People are kind of pausing and saying 'did yesterday mean anything?', because it was a decent move up in USD-CAD yesterday," said Aaron Hurd, senior portfolio manager in the currency group at State Street Global Advisors.
"More technically oriented traders are waiting to see if it breaks above that resistance level in USD-CAD at 1.3880, and then we could track up to 1.40."
Canadian data on Tuesday showed a sharp deceleration in 3-month annualized measures of underlying inflation that are closely watched by the Bank of Canada, which led to investors raising bets on the central bank cutting interest rates over the coming months.
Chances of a rate cut by October have climbed to roughly 70% from 56% before the data. The BoC has been on hold since lowering its benchmark rate to 2.75% in March.
The U.S. dollar (.DXY), edged lower against a basket of major currencies as minutes from last month's Federal Reserve policy meeting showed that "almost all" officials preferred leaving rates unchanged. Chair Jerome Powell is expected to speak on Friday at the annual Jackson Hole economic symposium in Wyoming.
Canadian bond yields edged lower across the curve, with the 10-year down 1.3 basis points at 3.442%.
Reporting by Fergal Smith; editing by Diane Craft
