Euro rises to two-week high supported by Italy and oil

LONDON (Reuters) – The euro hit its highest level in two weeks on Monday, as risk appetite had risen due to rising oil prices and reports that the price of oil had risen. Italy could reduce its budget deficit to appease the EU.

Developments in Italy and the news of the UK and EU agreement on secession have helped the European currency to overcome the impact of disappointing data on the sentiment of German companies.

The pound sterling rose about one-third of a percent to 1.2880 dollar after Sunday's deal on the British exit from the European Union, but foreign exchange gains have have been limited by doubts about Prime Minister Teresa May's ability to approve the split parliament deal.

The single currency grew by almost a third of a percent to 1.1358 dollars and 0.5% to 128.65 yen. The euro hit its two-week high against the dollar, at $ 1.1442 last week.

Italy could reduce its budget deficit next year to 2% of gross domestic product (GDP) to avoid punitive measures on the part of Brussels, said Monday two government sources.

The dollar index, which tracks the performance of the greenback versus a basket of major currencies, declined 0.2% to 96.73.

Another sign of investor risk appetite, the yen has traded at 113.18 yen to the dollar, down about 0.2% against the greenback, while the Australian dollar it's appreciated 0.5% to 0.7261 dollar, up from 0.7202 dollar last week.

The Norwegian krone was supported by a recovery in oil prices, up 0.5% to 8.55 crowns per dollar.