[Dan]

USD/CAD looks to be trapped in a range at the moment, with the market’s bounce from the upper 1.14 area that provided some support for the USD in November slowing the broader decline in funds for the moment. Given that we have seen a
sharp fall in the USD over the past few weeks without any significant correction occurring, a squeeze higher (possibly as high as the mid 1.17s/low 1.18s) really would not surprise us at this stage but overall, we remain upbeat on the CAD and
broadly negative on the USD and we still think rallies are there for the selling, with medium and longer term charts pointing to a significant trend change (lower) in this market. Oil prices are drifting back a little from yesterday’s highs but commodities remain generally well supported on global recovery hopes. Note that Ernst & Young reported today that most mined commodities will experience “severe” supply constraints in the coming years as demand from government led infrastructure projects outstrips supply due to weaker investment and exploration through the current downturn.