The Canadian dollar gained strength against the US dollar late this evening after BOC Gov Poloz speech at London boosted the Canadian dollar.
Stephen Poloz says the time has come for the Bank of Canada and other central banks to reinvent monetary policy by moving beyond solely targeting inflation.
Central bankers need do a better job of making sense of a host of new risks buffeting the financial system, such as exchange rate moves and globalized production chains, the Bank of Canada governor said Tuesday.
“We need to develop a monetary policy framework that integrates inflation risks and financial stability risks, both statically and dynamically, and captures much more accurately the uncertainties we face,” he said.
But Mr. Poloz, speaking to an audience at Western University, offered no fresh clues about whether the bank intends to cuts interest rates again – either at its next scheduled rate-setting announcement March 4, or the following one in April.
But he did offer a more fulsome explanation for why the bank cut its main lending rate by a quarter-percentage point to 0.75 per cent in January – a move that caught financial markets by surprise.
Mr. Poloz said the rate cut “buys us some time” to see how the Canadian economy responds to the dramatic plunge in the price of oil.
Intra day bias remains slightly bearish so caution is advised as the general trend for the pair on the daily and 4 hours charts remains in buy mode. A break and close below 1.24777 support which happens to be below weekly central pivot should bring further fall to 1.24063 (weekly support 1).
Later tomorrow Fed Chair Yellen will be testifying and this will provide more insight to the US dollar as we already had a dovish comment from her in the last meeting which was yesterday.