U.S. dollar rallied against the single currency after the release of U.S. jobs report. U.S. payrolls dropped by 524,000 in December after declining by 584,000 in November, less than the expectation of a reduction of 525,000. The unemployment rate in December increased to a 16-year high of 7.2% from 6.8% in November.

The single currency tumbled against the dollar from 1.3754 to 1.3415 on Friday. Euro fell sharply from 0.9049 to 0.8839 and from 125.28 to 121.16 against the sterling and the Japanese yen respectively on speculation that the European Central Bank will cut its main refinancing rate by 50 basis points to 2.00% next week from current 2.5%. Ratings agency Standard & Poor downgraded Greece's sovereign credit rating to negative watch and cut Ireland's outlook, adding pressure on the euro. South Korea’s Won fell after the central bank reduced its target lending rate to a record low and said the economy is weakening.

The greenback rallied versus the Swiss franc from 1.0888 to 1.1191 on Friday while U.S. dollar weakened against the Japanese yen from 91.66 to 90.15. The British pound retreated from 1.5350 to 1.5128.

Next week will see the release of Japan, U.K. and U.S. trade balance respectively, Japan's current account and U.K. BRC retail sales on Tuesday; German GDP in 2008, eurozone industrial production and U.S. retail sales on Wednesday; Japan's domestic CGPI, German CPI and HICP, U.S. PPI and jobless claims on Thursday; eurozone trade balance, U.S. core CPI and industrial production on Friday.