1) We know RBA-BOC rate is correlated with AUD/CAD:
The Rate spread, 375 bps, is now 200 bps (or 1.5 S.D.) above average (since 1993) and just 50 bps below the peak at 475 bps. => Risk-to-Reward basis for shorting AUD/CAD.
2. CA Unemployment Rate - AU Unemployment (which is near the peak now) vs AUD/CAD: (- Fairly correlated)
We know that US unemployment (thinner line) is going to decline in 2011 (given GDP at 3.5%-4%). We can expect CA unemployment would drop relatively to AU.