Andrew Bundziak Canada Variant View Consensus on the street

1/11/13

USD- Expected to strengthen broadly on relative central bank policy & growth. CAD -Weakens as Canadian growth underperforms & BoC remains dovish The CAD positioning is getting closer to extremes, which could leave CAD vulnerable to short covering if sentiment shifts said chief currency strategist Camilla Sutton of Bank of Nova Scotia
Canada 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2.63 2.01 1.18 -2.71 2 2.14 2.38 0.31 6.3 6.06 6.15 8.29 1.17 1 1.22 1.05 3.38 1.78 7.99 1 2.53 2.92 7.47 1.02 1.71 1.52 7.29 0.99 1.7 1 7.07 1.06 2.3 2.5 1.5 1.9 6.8 6.55 1.08 1.1

Country: Year Economic Activity Real GDP (YoY%) CPI (YoY%) Unemployment (%) Exchange Rates USDCAD

*Consensus Data From Bloomberg Terminal* Variant View: Contrary to the consensus view that the Canadian dollar will weaken compared to the USD in 2014, The CAD will instead begin to strengthen in early 2014 due to: The Canadian economy experiencing better than expected GDP growth in 2014 due to: o Canadas employment climate improving and housing boom Source o Continuing positive consumer sentiment as evidenced by Ontario recently recording the biggest increase in confidence over the past four months. Source2 U.S Fed Chairman Janet Yellen will only slightly trim back Q.E in 2014 due to fears of damaging the economic recovery. As a result Q.E Tapering will be implemented much slower than expected. Thus the Canadian dollar will begin to strengthen after the January 29th Fed meeting (if tapering is delayed). Source3