Your baby will be a Canadian citizen, regardless of where s/he is born, because you are a citizen. If your baby is born in the US, s/he will be a dual US/Canadian . . . which is not necessarily a bad thing - if born in Canada, just a Canadian citizen . . . and perhaps also a citizen of the country your wife was born in.
Thanks for making it clear Rob; howver, my question still remains. How/If will it effect the application process, if at all? Thanks