FOREX-Dollar gains as appetite for risk subsides

* Dollar recoups overnight losses
* Euro-dollar hits new high of $1.1916
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

LONDON, Aug 6 (Reuters) - The dollar gained as appetite for
risk dwindled in London early on Thursday, as markets waited for
U.S. jobs data and updates about fiscal aid negotiations in
Washington.
Risk appetite had grown on Wednesday after ISM data in the
United States new service industry orders jumped to a record
high. But the data also showed that hiring
declined, suggesting a labour market recovery is faltering.
The dollar fell against a basket of currencies in overnight
trading, reaching a two-year low of 92.495 at 0608 GMT, then
picking up by 0700 GMT to trade 0.1% lower on the day at 92.713
=USD .
Euro-dollar reached a two-year high of $1.1916 towards the
end of the Asian session, then slipped back to $1.1876
EUR=EBS . The euro was boosted by PMI data on Wednesday that
showed the euro zone economy starting to expand. "The market is now focusing on the positive news and in its
view, there was plenty of that over the course of the week, and
it has therefore sold the dollar," wrote Commerzbank analyst
Antje Praefcke in a note to clients.
"However, that does not mean that the dollar will have to
appreciate significantly in case of rising risk aversion. Too
much damage has been done over the past weeks, causing market
confidence in the US dollar's role as a safe haven to be
shattered," she added.
The riskier Aussie and Kiwi dollars strengthened overnight
but fell as the dollar started to recover.
At 0711 GMT, the Australian dollar was at $0.71905, down
0.1% on the day AUD=D3 , and the New Zealand dollar was down
0.2% at $0.6639 NZD=D3 .
Australia's second-biggest city, Melbourne, started a
six-week total lockdown on Thursday, following a resurgence of
COVID-19 cases. The Swedish and Norwegian crowns rose against the dollar,
with the Swedish crown at its strongest since mid-2018 SEK=D3 .
The Swiss franc fell versus the euro, suggesting underlying
market caution about a recovery in Europe EURCHF=EBS .
Analysts worried that programmes to support the economy,
such as unemployment benefits, are covering up the underlying
damage to the economy.
"We are deluding ourselves stimulus to shield us can be
sustained forever everywhere. It can't," wrote Michael Every,
global strategist at Rabobank.
Investors were waiting for lawmakers to agree on a new
package of government support for the United States. With no
sign of an agreement in sight, Republicans and Democrats
remained trillions of dollars apart. Unemployment payments of $600 a week for the tens of
millions of Americans who lost their jobs in the pandemic ran
out last Friday.
U.S. labour market data is due at 12.30 GMT.