* C$ at C$0.9564, or $1.0456
* Bond prices weaker across curve
* Bank of Canada expected to hold rates on Tuesday
By Solarina Ho
TORONTO, April 11 (Reuters) - The Canadian dollar remained near 3-1/2 year highs on Monday morning, firming against the U.S. dollar as oil prices remained at lofty levels and as traders positioned themselves ahead of Tuesday's Bank of Canada policy announcement and its quarterly report on Wednesday.
Oil prices fell from Friday's strong rally on some profit-taking and prospects of a Libyan ceasefire, but were still trading above $125 a barrel for Brent Crude and above $111 for U.S. crude. Strong oil, a key Canadian export, is usually a key support for the country's commodity-linked currency. [O/R]
A Reuters poll of 41 economists and strategists last week found unanimous agreement that the central bank will keep its key interest rate at 1 percent on Tuesday. [ID:nN07149592] [CA/POLL]
The poll also found that July 19 was widely seen as the most likely date for the central bank to make its first rate hike of 2011, a shift from a previous poll that saw the median forecast for the next increase to be in May.
"Though we don't expect (Bank of Canada) to raise rates, the Monetary Policy Report looks like it's going to have to take a somewhat more optimistic tone than they had in January," said David Watt, a senior currency strategist at RBC Capital Market.
"Then you have that commodities story in the background ... general optimism about global growth ... it's a relatively positive backdrop for the Canadian dollar."
At 9:13 a.m. (1313 GMT), the currency CAD=D4 stood at C$0.9564 to the U.S. dollar, or $1.0456, up from Friday's North American finish of C$0.9574 to the U.S. dollar, or $1.0445.
It was seen trading between C$0.9611 and C$0.9550 to C$0.9500, though analysts see little resistance to its rise until it reaches the C$0.9060 range last reached in November 2007.
Canadian bond prices were weaker across the curve. [US/]
The interest rate-sensitive two-year bond CA2YT=RR was down 3 Canadian cents to yield 1.912 percent, while the 10-year bond CA10YT=RR slipped 11 Canadian cents to yield 3.458 percent. (Editing by Peter Galloway)