06:07 AM EDT, 06/03/2024 (MT Newswires) -- The US dollar rose against most major counterparts in early European trade on Monday as month-end selling subsided and yield spreads widened modestly in favor of the greenback going into the release of the latest ISM manufacturing PMI survey.

Japan's yen was the only G10 currency to rise against an otherwise-stronger US dollar on Monday when month-end selling subsided and the greenback found its feet as yield spreads worked against major peers like the euro and pound.

G20 currencies were much more of a mixed bag, however, with Asia-Pacific counterparts generally benefiting amid widespread declines for bond yields and after China's Caixin Manufacturing PMI reached a two-year high in May.

Korea's won was the G20 outperformer but it was followed closely by the Indian rupee, which rallied in response to local election results, as global market attention turned to the looming release of the ISM Manufacturing PMI at 10 am ET.

A quick summary of foreign exchange activity heading into the European lunch hour and US open;

In Europe EUR/USD was quoted 0.02% lower around 1.0838 after falling from session highs around 1.0859 and continuing the retracement from Friday's intraday peak around 1.0882. Europe's single currency struggled as front-end French and German yields fell further while final readings of the S&P Global Manufacturing PMIs underwhelmed consensus estimates in France and Italy. The single currency will be sensitive to this week's volley of US PMI and non-farm payrolls data, as well as to the forward guidance given following a widely expected interest rate cut from the European Central Bank on Thursday.

Elsewhere in Europe, British pound sterling was an underperformer in the G10 basket when GBP/USD was quoted 0.29% lower around 1.2701, down from overnight highs around 1.2756 and further off Friday's intraday peak of 1.2766. Sterling was undermined by tightening government yield spreads as the UK bond market outperformed. It also fell further after the S&P Global Manufacturing PMI rose less than was expected in the final reading for May. There is no economic data of significance released in the UK through the remainder of the week, which leaves sterling trading as a function of developments in the US.

In Asia, USD/JPY was quoted 0.12% lower around 157.04 after falling from overnight highs around 157.47 but it was up notably from the intraday lows around 156.54 seen on Friday when the MoM reading of the US core PCE price index surprised on the low side of expectations for April. The yen overlooked weaker-than-expected capital spending figures for Q1 and a below-consensus Jibun Bank Manufacturing PMI, perhaps benefiting from the improved Caixin Manufacturing PMI in China.

Back in North America, the Canadian dollar was also a laggard among G10 currencies when USD/CAD was quoted 0.33% higher around 1.3664, up sharply from overnight lows around 1.3606 and also up off the intraday lows around 1.3616 seen on Friday. There was no economic data released in Canada overnight but the Loonie will be sensitive to Monday's US ISM PMI survey, as well as to whether or not the Bank of Canada cuts its cash rate from 5% on Wednesday. Consensus expects a rate cut but Overnight Index Swap rates imply that the decision is much closer to a 50/50 affair.