* C$ at C$1.0649 vs US$, or 93.91 U.S. cents * C$ a 3-year low against US$, weaker vs most other currencies * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Dec 3 The Canadian dollar hit its lowest level in more than three years on Tuesday on investor speculation that the Bank of Canada could strike a more dovish tone in a policy decision due later this week. The currency has fallen in four of its last five sessions, dropping through key support levels as bearish sentiment builds. The Bank of Canada will release its interest rate and policy decision on Wednesday following its first meeting since a policy shift in October, when the central bank dropped any mention of a rate hike. "The Bank of Canada is likely to sound very dovish tomorrow," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto. "They're unlikely to cut rates because they still do have financial stability risk, but really it's the shift in tone." The Bank of Canada is seen as all but certain to hold rates at 1 percent, where they have been since 2010. The recent policy shift pushed out market expectations for the next rate hike into 2015. The Canadian dollar ended the North American session at C$1.0649 to the greenback, or 93.91 U.S. cents, weaker than Monday's close of C$1.0641 or 93.98 U.S. cents. The loonie traded as far as C$1.0673, its lowest level since the end of August 2010. The low previously hit this year in July at C$1.0609 had represented significant support for the currency, which it first broke through late last week. "Right now is a pretty key level, just being a fresh cycle high. If we push through here, it could get a lot uglier for the Canadian dollar," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. If the loonie pushes through current levels, C$1.07 will be the next one to watch, Smith said. The Canadian dollar was also weak against most of its other major currency pairings, including the euro and the British pound after data showed Britain's construction sector unexpectedly picked up more speed in November. The euro hit an 3-1/2-year high against the Canadian dollar, while the pound struck a 4-year high. Investors will also be taking in a number of economic reports out of the United States this week, including consumer sentiment, third-quarter gross domestic product and the closely-watched unemployment report. The data this week could be key in calibrating market expectations for when the Federal Reserve may start to wind down its economic stimulus. Monday's better-than-expected factory data has boosted sentiment that there is an outside chance the start of tapering could come at the Fed's next meeting later in December, said Smith. The two-year bond was up 7-1/2 Canadian cents to yield 1.071 percent, while the benchmark 10-year bond rose 19 Canadian cents to yield 2.584 percent.