Perhaps part of the story for the Canadian dollar is the bump in oil prices and these wholesale numbers, but that's not all that evident in the fixed-income market.
(The survey) certainly continues to suggest that the Bank of Canada need not be concerned about inflationary pressures arising from manufacturers.
The Bank of Canada may look closely at this number and sit up and think whether they should go further. There is a probability they may go beyond 4 percent.
We did have a weak University of Michigan confidence index ... but on the flip side, you had the producer price index, which came in a little strong.
Most people would argue the Canadian dollar is fairly valued somewhere in the 80-85 U.S. cent range, and we're not far from that. So I suspect the conditions manufacturers are facing right now are perhaps more reflective of the true long-term type of conditions they should expect.
I don't think this is going to cause the Bank of Canada to differ in its ways. We still think 4 percent (overnight rate) is the likely peak for them.
The most notable (change) is the insertion of the word 'modest.' And that's been interpreted in a dovish fashion.
We've been told before that this is the Bank of Canada's favorite measure. So, the Bank of Canada, without question, is going to sit up quite closely and look at this release.
It does look like a U.S. dollar story. There doesn't seem to be any obvious fundamental story.
There's no question manufacturers are paying the piper in some sense, in that they did get away with a lot over the 1990s when the Canadian dollar was weak.
