The Reserve Bank of Australia surprised markets when it hiked interest rates this week, but CIBC World Markets Inc. says that doesn’t mean that Canada is close behind.

After the surprise move, “the money market reaction was greater in Canada than it was down under,” CIBC observes, noting that, “Global investors tend to lump the two countries together as commodities exporting, dollar-bloc economies, and viewed Australia’s move as a harbinger of things to come here.”

Couple that with recent jobs gains, and futures are pricing in two hikes from the Bank of Canada before mid-2010, CIBC reports, despite the central bank’s insistence that it will leave rates unchanged until then.

However, CIBC doesn’t see the BoC moving that fast. CIBC says the two countries economic circumstances are vastly different. It points out that Australia managed to escape an outright recession, and it saw a much more modest rise in unemployment. It will likely also be the only advanced economy to record a positive growth rate for 2009, the firm says.

“Looking ahead, there are clear reasons why Canada will lean much more heavily on easy monetary policy to ensure a 2010 recovery. Canada sends fully three quarters of its exports to its neighbour to the south. So although our financial sector emerged relatively unscathed by the global banking turmoil, the same can’t be said for the economy of our key trading partner,” CIBC says “Evidence continues to point to a sputtering, and fragile American recovery, and if there was any lesson learned in the past year, it’s that Canada’s fortunes are inextricably tied to those of the U.S.”

“True, Canadian fortunes are improving, a development that will one day call for tighter monetary conditions. But financial markets are already delivering such a tightening by bidding up the Canadian dollar to levels miles beyond where our trade balance — which sits stuck in a deficit — would warrant. And while a falling jobless rate is something that the Bank of Canada will cheer at 8.4%, we are still far from full employment, or Australia’s much leaner 5.7% unemployment rate,” it concludes.

“If you want to watch a central bank for clues about when Carney will unleash his first rate hike, keep your eye of on the U.S. Fed, not the RBA. Location, location, location, can mean as much for economic fortunes as it does for real estate,” it says.

IE