FOREX-Dollar on backfoot ahead of payrolls data, trade war doubts

By Stanley White

* Graphic: World FX rates in 2019

* Non-farm payrolls expected to show slower job growth

* Worries about trade war dent dollar

* Slump in Treasury yields gives dollar bulls pause

By Stanley White

TOKYO, Nov 1 (Reuters) - The dollar traded near a three-week low versus the yen on Friday before a U.S. employment report expected to show a slowdown in job creation, highlighting concerns about the health of the world's largest economy.

The U.S. currency also nursed losses against the euro and the pound after Bloomberg reported that Chinese officials have doubts about reaching a comprehensive long-term solution to the U.S.-Sino trade war.

The U.S. Federal Reserve cut interest rates this week for the third time this year and indicated that further monetary easing is unlikely, citing several pockets of strength in the U.S. economy.

However, the Fed's hawkish tone has failed to put a floor under the dollar and U.S. Treasury yields, which suggests some investors do not share the central bank's confidence in the economic outlook due to risks posed by the trade war.

"The Fed is expected to be on hold in December, but the markets are trying to price in a rate cut next year, because people doubt that talks to end the trade war will go smoothly," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

"If the jobs data prints to the weak side, that would put even more pressure on the dollar."

The dollar stood at 108.02 yen on Friday, close to a three-week low of 107.92 reached on Thursday after renewed doubts about efforts to resolve the U.S.-China trade war rattled the greenback and pushed global stock markets lower.

The U.S. currency is on course for a 0.6% decline against the yen this week, which would be its biggest weekly loss since Oct. 4. The dollar index against a basket of six major currencies eased slightly to 97.296, on course for a 0.55% weekly decline.

U.S. President Donald Trump said on Thursday the United States and China would soon announce a new site where he and Chinese President Xi Jinping will sign a "Phase One" trade deal after Chile cancelled a planned summit set for mid-November.

However, Trump's comments on Twitter did little to offset concerns sparked by Bloomberg's story, which said Chinese officials will not budge on the thorniest issues in trade talks with the United States.

In the offshore market, the yuan traded at 7.0464 per dollar, on course for a fifth straight week of gains.

Washington and Beijing have been locked in a fierce near 16-months long trade war that has slowed global trade, raised the risk of recession for some economies and roiled financial markets.

The U.S. economy is forecast to have created 89,000 new jobs in October, slower than 136,000 new jobs created in the previous month, according to a Reuters poll.

The yield on benchmark 10-year Treasury notes fell to 1.6892% on Friday, extending declines from Thursday that were triggered by waning hopes for a resolution to the trade friction.

The pound traded at $1.2937, on course for a 0.79% weekly gain. Sterling was quoted at 86.22 pence per euro, headed for a 0.19% rise this week.

Sterling has found support due to the receding risk of Britain crashing out of the European Union without a deal on trade and borders. (Reporting by Stanley White Editing by Jacqueline Wong)