* Dollar drops to three-week low vs yen
* New Zealand dollar jumps to seven-week high against U.S.
dollar
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Olga Cotaga
LONDON, Nov 1 (Reuters) - The euro held its gains against
the dollar on Friday as investors sold the U.S. currency,
expecting the United States will soon join the global economic
slowdown.
The dollar and the Japanese yen, both seen as safe-haven
investments, appreciated equally each time the United States
looked deadlocked in its trade dispute with China.
But the dollar is losing that status, after poor U.S.
economic data. Investors do not share the Federal Reserve's
confidence in the economic outlook because of the risks posed by
the trade war, which contributed to declines by the dollar and
U.S. Treasury yields.
Traders were looking to a U.S. employment report, which was
expected to show job creation has slowed, highlighting concerns
about the health of the world's largest economy.
The Fed cut interest rates this week for the third time this
year, but it indicated further cuts were unlikely, citing
pockets of strength in the U.S. economy.
The euro was last up 0.1% at $1.1165 EUR=EBS , close to a
10-day high.
The dollar also lost against the yen JPY=EBS , last trading
at 107.89 yen, a three-week low, after Bloomberg reported that
Chinese officials have doubts about reaching a comprehensive
solution to the U.S.-Sino trade war.
The U.S. currency is headed for a 0.6% decline against the
yen this week, its biggest weekly loss since Oct. 4.
"Following the Fed rate meeting, the market not only feels
confirmed in its rate cut expectations, it has even raised
them," Commerzbank analysts said in a note to clients, citing
the reports of Chinese doubts about a trade deal.
"The ISM index and the U.S. labour market report today will
be decisive for whether the economic pessimism about the U.S.
and thus the rate cut expectations as well as dollar weakness
will continue short term," the analysts said.
Forecasts are the U.S. economy created 89,000 new jobs in
October, fewer than the 136,000 created in September, according
to a Reuters poll. An ISM manufacturing PMI reading, however, is
expected to rise to 48.9 in October from 47.8 in September.
Elsewhere, the New Zealand dollar NZD=D3 jumped to a
seven-week high of 0.6443 against the dollar, and was last up
0.4% at 0.6436.
The pound GBP=D3 rose 0.3% to $1.2973, poised for a 1%
weekly gain. Sterling EURGBP=D3 was quoted at 86.09 pence per
euro, headed for a 0.2% rise this week.
Sterling has found support as the threat of Britain crashing
out of the European Union without an agreement on trade and
borders begins to fade.