Dollar gains on euro after mixed US jobs data

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In late London deals, the shared eurozone unit edged down to $1.3582 from $1.3630 in New York late on Thursday.

Against the Japanese currency, the dollar inched higher to 81.93 yen from 81.59 yen on Thursday.

The market had tread water ahead of the release of US jobs data, and investors largely shrugged off news that job creation ground to a halt in January as winter storms gripped broad swathes of the country.

The economy added 36,000 nonfarm jobs, the Labour Department said, far fewer than the 148,000 expected by most analysts and down from 103,000 in December.

But for the second month in a row the unemployment rate fell 0.4 percentage points to a 22-month low of 9.0 per cent. The drop was unexpected after an average analyst estimate of a rise to 9.5 per cent.

"Much of the weak payrolls data can be attributed to the shocking weather conditions endured across multiple states in January, and so whilst the numbers themselves are not good at all, taking them with a pinch of salt may be needed," said Joshua Raymond of City Index in a client note.

"January payroll numbers were far below the expectations but it is likely that the severe winter weather, which affected much of nation, dampened payrolls," said Sophia Koropeckyj at Moody's Analytics.

"As such, the weak top-line number should not raise concerns about the recovery," she added.

The euro recorded its sharpest decline in 10 weeks on Thursday as it slumped from $1.38 to around $1.36 after the European Central Bank kept interest rates on hold and ECB president Jean-Claude Trichet eased fears over high inflation.

"Trichet and the ECB governing council are inching towards a rate hike this year, but at a slower pace than the market had expected," said Michael Woolfolk of BNY Mellon.

Europe's leaders meanwhile gathered for a one-day summit on Friday, where Germany and France launched a radical drive to unify the diverse, debt-ridden eurozone economy.

In exchange for further aid to partner governments struggling to balance their books, the 17-nation currency area's major powers want common policy goals and restrictions imposed by all, which they say will make the eurozone a more competitive, more efficient economy.

But plans to stifle wage growth provoked an immediate backlash.

The uncertainty spurred an increase in yields of bonds from weaker eurozone countries. Spanish 10-year bonds returned 5.132 per cent compared to 5.122 per cent on Thursday. The yield on 10-year Portuguese bonds rose to 6.949 per cent from 6.869 per cent.

Eurozone core countries also saw rising bond yields, which dealers said was due to greater appetite for risk following positive economic data over the past days.

The yield on 10-year German Bunds inched up to 3.259 per cent from 3.243 per cent, while the yield in 10-year French bonds rose to 3.617 per cent from 3.596 per cent.

Outside the eurozone, the yield on 10-year British Gilts rose to 3.817 per cent from 3.777 per cent on Thursday.

In London on Friday, the euro changed hands at $1.3582 against $1.3630 in New York late Thursday, at 111.29 yen (111.23), £0.8439 (0.8446) and 1.2978 Swiss francs (1.2991).

The dollar stood at 81.93 yen (81.59) and 0.9554 Swiss francs (0.9455).

The pound was at $1.6095 (1.6139).

On the London Bullion Market, the price of gold climbed to $1,355 an ounce from $1,328 late on Thursday.