(Reuters) - The euro extended a sharp rally against the dollar to trade 2 percent higher on Friday after European leaders agreed on action aimed at lowering the borrowing costs of Italy and Spain and create a single supervisory body for euro area banks.
The euro climbed as high as $1.2689 on Reuters data, the strongest since June 21. It was last at $1.2679, up 1.9 percent on the day.
A rise in risk appetite buoyed higher-yielding currencies, driving the Australian dollar up 2 percent to its strongest since early May. The Aussie was last up 1.9 percent at $1.0232 .
