EFTA01452893.pdf

Classification: For internal use only I like USDCAD call options to position for further weakness in CAD. Spot FX is currently 1.095. Over the course of the past week the interest rate curve has started pricing in a small amount of rate cuts - this development is significant and clearly a beginning of a pain trade. I believe it can go further. Lower CAD rates from here will drive USD CAD higher. <mime-atlachment.gic> The limited downside play I like best in USDCAD is buying a 3month expiry 1.10 / 1.13 call spread on USDCAD but where the short 1.13 call position only exists (knocks-in) if USD trades at 1.17 trades in the market before the option expires, otherwise the option payoff is the same as a 1.10 call option. It costs 1% of USD notional. I believe the buyer is well compensated for the knock-in component. If USDCAD rises to 1.15 the option payout is 5 big figures. If 1.17 trades before expiry the payout is limited to 3 big figures. Max loss is premium paid. We can price other structures to fit the risk tolerance (higher or lower) of clients - let us know Key Macro Highlights • The economy clearly lags the US. Dec13 unemployment unexpectedly rose last Friday to T2% • South of the border demand for USDCAD is declining as the US heads towards energy independence • Low inflation and weak exports are likely to preclude any rate hikes in 2014 <mime-attachment.git, Best, Nay <mime-attachment.gif> Nav Gupta Managing Director Deutsche Bank AG. Fdiale London Deutsche Asset 8 Wealth Management 105/108 Okl Broad St (Pinners Hall). EC2N lEN London. United Kingdom Tel. Mob Erna My proposed ideas are being delivered to you by the DeAWM Key Client Partners PKCP") London desk for discussion purposes onty, and do not create any legally balding obligation on the part of Deutsche Bank AG and r or its affiliates (Dr). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiF1D), who understand the strategy. characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. M trades on proposed ideas shall be subject to the relevant internal approvals prior to execution. <mime-allachment.gif> CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0 110203 CONFIDENTIAL SDNY_GM_00256387 EFTA01452893