* 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 tmsnrt.rs/2egbfVh (Adds fresh quotes, context, updates prices)
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, close to a 10-day high. October was the currency's best month since January 2018.
Therefore, "momentum is there for further short-term gains if we see a downside surprise" in U.S. non-farm payrolls on Friday, said MUFG analysts in a note to clients.
"Fed Chair (Jerome) Powell justified much of his optimism this week on a strong jobs market and continued strong consumer spending ...(so) risks are building of a sharper slowdown that would seriously question current market pricing of just one rate cut over the coming twelve months," the analysts said.
Money markets are pricing in a 25-basis-point cut by June 2020, Refinitiv data showed.
A pool of euro/dollar options worth a total of $3.1 billion with a strike at $1.1150 also kept a floor under the currency pair.
The dollar also lost against the yen, falling to a three-week low of 107.89, after Bloomberg reported that Chinese officials have doubts about reaching a comprehensive solution to the U.S.-Sino trade war. Dollar/yen was last flat at 108.02. 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 jumped to a seven-week high of 0.6443 against the dollar, and was last up 0.2% at 0.6425.
The pound rose 0.1% to $1.2956, poised for a 1% weekly gain. Sterling was quoted at 86.10 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.
Reporting by Olga Cotaga, editing by Larry King