The Canadian Dollar is flirting with the 1.2000 level, USDCAD that is, and Friday’s inflation data may determine if this currency pair can breakout above this level and sustain it or if we will see some profit taking which will take this currency pair roughly 200 pips away from the psychological 1.2000 mark. Annualized inflation is expected to drop to 1.6% in December with a monthly deflationary reading of 0.3%. I think the risk remains to downside for the Canadian Dollar and I would be careful going into the report.