* C$ up at C$1.0168 to the US$, or 98.35 U.S. cents
* Bonds weaker ahead of Fed rate decision
By Jennifer Kwan
TORONTO, March 16 (Reuters) - The Canadian dollar resumed its march higher against the U.S. currency on Tuesday, hovering near its 20-month highs, bolstered by firmer oil and equity prices.
Oil held steady above $80 a barrel in a cautious market ahead of an OPEC meeting and monetary policy moves expected from the world's top two oil consumers, the United States and China. [O/R]
Also supporting the Canadian dollar's move higher were world stocks, which rose on Tuesday ahead of the U.S. central bank meeting. [MKTS/GLOB]
The Federal Open Market Committee holds a one-day meeting on Tuesday where it is expected to reiterate its vow to keep interest rates very low for an "extended period."
While the Fed is expected to hold rates steady, the market is looking for any hints about the Fed's assessment of the economic outlook, said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
"Most scenarios still point for a continued stronger Canadian dollar. It's just a matter of how quickly and how crowded the trade is," said Askari, noting trade is crowded because "everybody has jumped on board."
"You can still expect to see some sort of long Canadian dollar squeeze. But we haven't seen it yet," he said.
At 7:38 a.m. (1138 GMT), the Canadian dollar was at C$1.0168 to the U.S. dollar, or 98.35 U.S. cents, up from Monday's close at C$1.0197 to the U.S. dollar, or 98.07 U.S. cents.
The Canadian dollar's move higher came after it tipped lower against the U.S. currency on Monday as investors took a break after an 11-day stretch of gains.
Canadian bond prices were largely flat to slightly lower on Tuesday, mimicking moves in the bigger U.S. Treasury market where prices slipped in Europe on caution before the Fed's policy decision later in the day. [US/]
The two-year government bond CA2YT=RR edged 2 Canadian cents lower to C$99.87 to yield 1.570 percent, while the 10-year bond CA10YT=RR slipped 16 Canadian cents to C$101.85 to yield 3.513. (Reporting by Jennifer Kwan)
