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From: Tazia Smith Sent: 1/22/2014 12:19:49 PM To: jeevacation • CC: Paul Morris Vinit ; Nav Gupta Vahe Stepanian Subject: USDCAD update, meaningful commentary post BOC... [Ij Attachments: pic11163.gif; pic21220.gif Classification: For internal use only Jeffrey - You've likely seen USDCAD moving your way today on the back of the BOC meeting. DB FX Strategist, Alan Ruskin notes, "Today the BOC has told the market in multiple ways that CAD weakness is desirable and the market should keep pushing on an open door." comment below. FYI only. Best Regards, Tazia Alpha Alert - BOC open door policy to CAD weakness: S quotes By Alan Ruskin This material is provided for historical reference and should not be relied upon as the current views of the author and may contain commentary pertaining to instruments that Deutsche Bank is now restricted from acting in. (close) Today the BOC has told the market in multiple ways that CAD weakness is desirable and the market should keep pushing on an open door. The BOC has gone out of its way to make clear that neither CAD weakness or slightly stronger 2014 us/canadian growth has offset downside risks to inflation. The comment that " Although the fundamental drivers of growth and future inflation appear to be strengthening, inflation is expected to remain well below target for some time, and therefore the downside risks to inflation have grown in importance" is the most important element in the statement. In addition an array of comments related to the currency all appear welcoming of currency weakness as evident in the statement that " stronger u.s. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and; in turn, business confidence and investment." Here are S clips from the policy report all consistent with the central Bank effectively telling the market to keep pushing on an open door to a weaker CAD: 1. "The Canadian dollar has recently fallen to around 91 cents U.S., compared with the 97 cents u.S. assumed in the October Report (Chart 8). This depreciation likely reflects the improved growth prospects in the United States, as well as reduced safe-haven effects that had pushed the Canadian dollar higher in the aftermath of the global financial crisis. By convention, the Canadian dollar is assumed to remain at or near its current level over the projection horizon. Also "despite depreciating in recent months, the Canadian dollar remains strong and will continue to pose competitiveness challenges for Canada's non-commodity exports" CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 101174 CONFIDENTIAL SDNY_GM_00247358 EFTA01446789