The euro rose on Friday after German parties agreed on a fiscal deal that could boost defence spending and revive growth in Europe's largest economy. The dollar weakened against the euro but rose against the Swiss franc and the yen,

German lawmakers have reached an agreement to exempt some defense spending from the nation’s tight rules on running up debt.

An agreement has been reached on plans by German chancellor hopeful Friedrich Merz to massively ramp up public borrowing, a source from the Greens party said on Friday, adding: "We are satisfied." Greens' support is seen as crucial to Merz's bid to pass the debt plan with a two-thirds majority in Germany's outgoing parliament.