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Dollar index at four-month low

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Safe haven yen and Swiss Franc perk up

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Bitcoin dips despite Trump signing order for bitcoin

strategic

reserve

(Updates with European early trading)

By Yadarisa Shabong and Brigid Riley

March 7 (Reuters) - The euro was set for its best week

in 16 years against the dollar on Friday, as Germany's

game-changing fiscal reforms continue to attract buyers, while

the greenback wallowed near a four-month low ahead of U.S. jobs

data later in the day.

It has been a volatile week for the currency market,

driven mainly by U.S. trade and economic growth uncertainties

and a

pivotal

development in Europe as its largest economy abandoned its

fiscal constraints to boost spending and revive growth.

"This week is a watershed moment ...because we've lived

through a couple of years of dollar and U.S. growth

exceptionalism and dollar strength," said Kenneth Broux, head of

corporate research FX and rates at Societe Generale.

Following a slew of mixed economic data out of the

United States so far this week, the focus on Friday falls on

U.S. nonfarm payrolls numbers as market participants will assess

the health of the economy and its implications on inflation and

interest rates.

The U.S. dollar index is on course for its worst

weekly performance since that of November 4, when Donald Trump

won the U.S. election.

The euro, on the other hand, is set for its biggest

weekly jump since March 2009.

"Right now we're in a situation where investors are

buying dips in euro/dollar and I think payrolls today can only

accelerate the move higher," Broux said.

"I do not think that a stronger NFP print is going to

stop this move higher in euro/dollar. It could slow it, but I

don't think it's going to change the trend."

The euro hit its highest level in four months

in the previous session, lifted by the European Central Bank's

hawkish rate cut and surging European bond yields on the back of

Germany's massive spending proposal.

'FALLEN OUT OF FAVOUR'

Another reprieve of levies aimed at Mexico and Canada

announced by U.S. President Donald Trump on Thursday offered

little relief to whiplashed markets.

The greenback lost some ground against the Canadian dollar

and Mexican peso following the announcement.

The exemption expires on April 2 when Trump said he will

impose reciprocal tariffs on all U.S. trading partners.

The dollar has "fallen out of favour" amid the uncertainty,

with the perceived inflationary impact of tariffs no longer

enough to support it, said Kieran Williams, head of Asia FX at

InTouch Capital Markets.

"Ahead of the NFP survey, evidence has tilted towards a

softer outcome. If this transpires it could spook markets

further," he said.

Against a backdrop of federal job culls, the U.S. likely

added 160,000 jobs in February compared with 143,000 in January,

while the unemployment rate is expected to have held steady at

4.0%, economists forecast in a Reuters poll.

Federal Reserve Chair Jerome Powell will be able to follow

up the jobs report when he speaks later in the day on the

economic outlook.

Markets currently have three Fed rate cuts priced in for the

rest of the year.

The safe-haven yen is at its strongest against the

greenback since early October, while the Swiss franc hit a

three-month peak of 0.8838.

Japan's economy minister Ryosei Akazawa said the nation has

cleared the key threshold for the government to officially

declare an end to long-term price deflation.

Elsewhere in Asia, the offshore yuan steadied at 7.2302.

China's exports slowed over the January-February period and

imports unexpectedly contracted, official data on Friday shows,

as trade tensions escalated with the United States.

The risk-sensitive Australian dollar slid 0.2% to

$0.6320.

In cryptocurrencies, bitcoin dropped after news that

Trump had signed an executive order on Thursday to establish a

strategic bitcoin reserve capitalised with tokens from criminal

or civil asset forfeiture proceedings.

The decline was likely largely because the order stated it

will not require additional bitcoin, said Zann Kwan, chief

investment officer of Revo Digital Family Office

Bitcoin was last down 1% at $88,592.87.