FOREX-Dollar extends gains after manufacturing data; Aussie dollar lags

* Dollar index rises after upbeat manufacturing data
* Aussie dollar falls after recession confirmed
* Euro falls back below $1.19
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

LONDON, Sept 2 (Reuters) - The dollar extended overnight
gains after positive U.S. manufacturing data, while the
Australian dollar took a hit when GDP data on Wednesday
confirmed the country is in recession for the first time in
three decades.
Manufacturing activity in the United States increased more
than expected in August, with new orders surging.
But factory employment - which was already in decline before
the coronavirus because of the Trump administration's trade war
with China - continued to lag, in line with economists' view
that the labour market's recovery is running out of steam.
The dollar, which has been on a losing trend, rose against a
basket of currencies, steadying overnight then extending gains
in early London trading. It was up 0.3% at 92.511 at 0712 GMT
=USD .
The news also pushed up Asian shares overnight, with
European indexes also opening higher. Commerzbank analyst Thu Lan Nguyen said that, although the
long-term economic fallout from coronavirus is unknown, it is
countries' relative economic performance that drives exchange
rates - in addition to monetary policy developments.
"The U.S. dollar was able to benefit from significantly
improved ISM data yesterday which suggest a continued high-speed
recovery, thus increasing the likelihood that the U.S. might be
able to overcome the crisis comparatively better after all," she
wrote in a note to clients.
"The ADP data and factory orders today are likely to provide
additional momentum for the U.S. currency short-term if these
sets of data turn out similarly positive," she said, referring
to data releases at 1215 GMT and 1400 GMT, respectively.
Risk currencies were mixed: the Norwegian crown was down
0.2% versus the dollar NOK=D3 while the Swedish crown SEK=D3
and kiwi dollar NZD=D3 were little changed on the day.
The Riksbank's deputy governor, Per Jansonn, is due to speak
on the economic situation at 1000 GMT.
The Norges Bank's deputy governor Ida Wolden Bache will
speak in a webinar, also at 1000 GMT.
The Aussie dollar fell after worse-than-expected Australian
GDP data confirmed the country's economy shrank 7% in the three
months to June, putting it in its first recession in nearly
three decades. At 0716 GMT, it was at 0.73525 versus the U.S. dollar
AUD=D3 , having recovered some losses but still down 0.3% on
the day.
The euro, which on Tuesday rose above $1.20 for the first
time since 2018, edged back down below $1.19. At 0721 GMT, it
was at $1.18785, down 0.3% since the previous session's New York
close EUR=EBS .
The euro showed no reaction to a slowdown in inflation on
Tuesday, but analysts said it raises problems for the European
Central Bank going forward. German retail sales fell unexpectedly, down 0.9% in July,
missing a Reuters forecast for a 0.5% increase and countering
hopes that household spending could drive a strong recovery from
the coronavirus shock. The spread of COVID-19 continues to limit activity, with
Poland set to ban direct flights from 44 countries, including
Spain, Israel and Romania. In the United States, there remain "serious differences"
between Democrats and the White House over proposed government
aid.