* C$ down at C$1.0330 to the U.S. dollar
* Bank of Canada expected to keep rates steady
* Bond prices up slightly across the curve
By Frank Pingue
TORONTO, Oct 20 (Reuters) - Canada's dollar was lower against the U.S. dollar on Tuesday ahead of a Bank of Canada rate announcement that could ratchet up the rhetoric on the domestic currency, given its recent surge.
The Bank of Canada is expected keep interest rates steady at record lows and tinker with its economic forecasts as it waits for firmer evidence of the recovery when it makes the announcement at 9 a.m. (1300 GMT). [ID:nN16310648]
"Certainly I think the markets are a little bit leery that the currency is going to get a mention," said Steve Butler, director of foreign exchange trading at Scotia Capital.
"Certainly they've expressed in many different ways and many different times that they are not too thrilled with the current strength in it."
The Canadian dollar has rallied as much as 28 percent off the four-year low it tumbled to in March, hitting C$1.0207 to the U.S. dollar, or 97.97 U.S. cents, last week.
At 7:25 a.m. (1125 GMT), the Canadian unit was at C$1.0330 to the U.S. dollar, or 96.80 U.S. cents, down from C$1.0293 to the U.S. dollar, or 97.15 U.S. cents, at Monday's close.
Also weighing on the domestic currency ahead of the bank's announcement was a drop in the price of oil, a key Canadian export, to below $80 a barrel. [O/R]
Domestic bond prices were higher across the curve as a slide in European stocks helped boost demand for lower-risk government debt. (Editing by Padraic Cassidy)