OREANDA-NEWS. The Canadian dollar was stuck around C\$1.26 to its US counterpart on Monday after a retreat at the end of last week, with a sharp fall in housing starts keeping the pressure on the currency.

The seasonally adjusted house-building metric fell short of expectations, a move that may have been aggravated by severe winter weather.

"The disappointment today in housing starts is indicative of overall concerns on the slowing of the pace of the housing market," said Greg Moore, senior currency strategist at Royal Bank of Canada.

In North American morning trade the Canadian dollar was at C\$1.2595 to the greenback, or 79.40 US cents, slightly stronger than Friday's close of C\$1.2610, or 79.30 US cents.

Moore says the currency could weaken to C\$1.34 this year on further resource price weakness and monetary policy divergence. Canada is a major oil producer, and its central bank cut rates in January while the US Federal Reserve is looking to hike.

He said such a move would encounter stiff resistance around the C\$1.30 level touched during the 2008 financial crisis.

Canadian government bond prices were higher across the maturity curve, with the two-year up 7.5 Canadian cents to yield 0.586 percent and the benchmark 10-year up 53 Canadian cents to yield 1.557 percent.