The dollar was up 0.66 of a cent at 91.16 cents US.
Bank of Canada governor Stephen Poloz said the central bank continues to take a hands-off approach when it comes to movements of the Canadian dollar, adding that trying to target the exchange rate would hurt its ability to pursue independent monetary policy in the country's best interests.
Without a floating currency, prices, wages and unemployment could fluctuate wildly and that would create havoc for people and business, Poloz said.
"A floating loon is a thing of beauty, and so is a floating loonie, at least from this economist's perspective," he said.
Economists have long suggested that Poloz's "dovish" talk on interest rates has helped take some of the shine off the loonie.
"The speech appears geared to refute the persistent speculation that governor Poloz would like to see a weaker Canadian dollar," Benjamin Reitzes, senior economist at BMO Capital Markets, said in a note.
"While the latter may be true, he stresses the bank will not intervene except possibly 'in the case of a breakdown in the market.' From a policy perspective, there's nothing in the speech to shift our view that the Bank of Canada will be on hold well into next year."
Earlier this month, the central bank indicated that it didn not foresee enough of a change in Canada's economic fortunes to adjust its key interest rate from the one per cent level it has held for the last four years.
In his speech, the governor also mentioned that he was cautiously optimistic about Canada's exports. A high dollar hurts exports, which can be a key factor in driving economic growth.
Meanwhile, the latest Canadian manufacturing sales figures reaffirmed that the recovery is faring well.
Statistics Canada said Tuesday that manufacturing sales rose 2.5 per cent to $53.7 billion in July, exceeding the previous record of $53.2 billion set in July 2008. Economists had expected a gain of just one per cent, according to Thomson Reuters.
Meanwhile, traders continue to wait for Wednesday's interest rate announcement by the U.S. Federal Reserve. Markets will be looking to see if the U.S. central bank gives any hint on whether it will raise interest rates sooner than mid-2015. Short-term rates have been near zero since the financial crisis of 2008-09.
The Fed has long reassured markets that "it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends." Traders will look to see if the central bank will drop the phrase "considerable time."
"It really is predicated on the Fed announcement," said Allison Mendes, a senior portfolio manager at Manulife Asset Management.
"If interest rates hit higher in the U.S., you'll expect to see a stronger U.S. dollar and expect to see a weaker Canadian dollar. That will be positive for export-oriented sectors of the economy.''
Overseas, there continues to be uncertainty in the markets over Thursday's referendum on Scottish independence. The result is generally believed to be too close to call. A Yes vote would result in huge complications from currency to membership in the European Union and NATO.
In commodities, the October crude contract on the New York Mercantile Exchange gained $1.96 to US$94.88 a barrel after OPEC's secretary-general said he expected the group to lower its oil outputs for the year when it meets in late November.
December gold bullion added $1.60 to US$1,236.70 an ounce, while December copper was up eight cents to at US$3.17 a pound.
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