VINACHEM

A successful German bond auction earlier on Wednesday had a limited impact on the single currency, which pared some of its losses to end the day almost flat at $1.3403.

The pound strengthened against the dollar and the euro, shrugging off weak figures for UK industrial output in October. Sterling was 0.6 per cent higher against the dollar at $1.5682. The euro fell 0.7 per cent to a month low against the pound at £0.8534.

Ian Stannard, at Morgan Stanley, said the pound was benefiting from speculation that any new treaty for Europe would only apply to members of the eurozone, not the wider EU – which could exempt the UK from a proposed financial transaction tax.

Traders said that a large order to buy pounds through one bank as part of the closure of a multi-billion dollar M&A deal agreed over the summer was also responsible for the swing in the pound against the dollar. The euro hit a session high against the Swiss franc of SFr1.2443 amid continued speculation that the Swiss National Bank would raise the ceiling at which it is prepared to buy euros to weaken its currency, following weak economic data on Tuesday. The single currency later fell back 0.2 per cent to SFr1.2383. The Swiss franc rose 0.2 per cent against the dollar to SFr0.9239.

The Canadian dollar was slightly weaker against the US dollar after a rally the previous day when interest rates were held at 1 per cent. It touched a low of $1.0123 before strengthening slightly to $1.0098.

The Australian dollar eroded some of its losses incurred earlier in the week after the Reserve Bank of Australia cut interest rates to 4.25 per cent following better-than-expected growth in gross domestic product in the third quarter. The Australian dollar rose 0.3 per cent to $1.0274 against its US counterpart.