The dollar retreated against major currencies on Friday on profit-taking but posted the biggest weekly gain since June 2006 as investors increasingly expect the U.S. growth slowdown to drag on other economies. The single currency tumbled from 1.4850 to 1.4440 this week, the biggest weekly drop against the dollar since June 2006 on speculation a slowing economy will force the European Central Bank to join the Federal Reserve in reducing interest rates as ECB President Jean-Claude Trichet said on Thursday that ‘risks surrounding the outlook for economic activity lie on the downside.’

OPEC Secretary General Abdullah al-Bardi said in an interview that OPEC may adopt the euro and abandon the dollar when pricing oil, however, the switch will take time. The greenback fell briefly against major currencies after the news. Atlanta Fed Bank President Dennis Lockhart warned on Friday that inflation undermines economic growth and stressed that the U.S. central bank has to focus on inflation. Euro jumped to 1.4548 against the dollar after the OPEC news and then retreated and closed at 1.4510 on Friday. The greenback traded inside 107.15-107.75 range versus the Japanese yen and retreated against the Swiss franc from 1.1082 to 1.1002. The British pound rebounded briefly to 1.9514 on the OPEC headline and then closed at 1.9459.

Canada's dollar rose versus the U.S. currency from 1.0105 to 0.9947 after a government report showed employers added more jobs in January than economists forecast, however, it pared gains on profit-taking ahead of G7 meeting over the weekend. Investors expect currencies will be high on the agenda when finance ministers and central bankers from Canada, France, Germany, Italy, Japan, the U.K. and the U.S. begin a Group of Seven summit in Tokyo on Saturday.

Next week will see the U.K. PPI, DCLG house prices and trade balance on Monday; U.K. BRC retail sales, CPI and RPI, eurozone and German ZEW survey respectively on Tuesday; Japan’s domestic CGPI and consumer confidence, U.K. RICS house prices, ILO employment, eurozone industrial production, U.S. retail sales and business inventories on Wednesday; Japan’s GDP and industrial production, German and eurozone GDP respectively, U.S. jobless claims and trade balance on Thursday; and eurozone trade balance, U.S. import price, Empire State manufacturing, capital flows, industrial production and University of Michigan survey on Friday.

Financial markets in Tokyo will be closed on Monday for a national holiday and the Bank of Japan will announce its interest decisions on Friday which is widely to keep interest rate unchanged at 0.5%.