* C$ at C$0.9875 vs US$, or $1.0127 * Bond prices drift lower across the curve By Claire Sibonney TORONTO, Dec 17 (Reuters) - The Canadian dollar steadied against the U.S. dollar on Monday after hitting a one-week low, as the commodity-linked currency struggled for direction despite some progress in U.S. budget deficit reduction talks. The first real movement in talks over the so-called fiscal cliff began on Sunday, with Republican House Speaker John Boehner edging closer to President Barack Obama's demands on taxation. "We are definitely underperforming," said Camilla Sutton, chief currency strategist at Scotiabank, noting that the U.S. budget talks were helping risk sentiment in other currencies. "There doesn't really seem to be any specific news that would justify that, so it seems like it's probably flow driven, which I would suggest implies that it does fade." At 8:01 a.m. (1301 GMT), the Canadian dollar stood at C$0.9875 versus the U.S. dollar, or $1.0127, compared with C$0.9865, or $1.0137, at Friday's North American session close. Earlier, the currency touched C$0.9882, or $1.0119, its weakest level since Dec. 10. Sutton noted the U.S. dollar resistance against Canada's at the 100-day moving average at C$0.9893 and support around C$0.9832. Canadian government bond prices eased across the curve, with the two-year bond off 2 Canadian cents to yield 1.139 percent, and the benchmark 10-year bond down 18 Canadian cents to yield 1.810 percent.