CIBC: In the last couple of...........>

DOLLAR-CANADA: CIBC: In the last couple of sessions it has become apparent that

the BoC Governing Council is increasingly data dependent, certainly more so than

was the case at the time of the October MPR, at that time of course they were

confident that rates would return to the midpoint of their neutral estimate

(2.5-3.5%). However now it is increasingly evident that Poloz is far less

certain where the neutral rate is, we will only know once we get there.

With growth tracking close to potential over the past year, our view is that

rates may not be too far away from the peak of this cycle. Ahead of the Jan 9

MPR publication we can expect markets to closely scrutinize the data. While

there will be much focus on the headline rate of employment change today, we

assume +12k vs the consensus of +10k, leaving the unemployment rate at 5.8% it

will be wages data that could be most instructive.

Should earnings continue to be disappointing, recent troubles in the high paying

oil sector need to be kept in mind, suggests that front end rate spreads look to

continue to push wider, in favour of the US. Under such a scenario corrections

back to 1.3350 remaining a buying opportunity.