11:55 AM EDT, 04/22/2024 (MT Newswires) -- The US dollar rose broadly against trade partner currencies in early North American trade on Monday as rising yields and curve steepening in the US bond market appeared to offset gains for stock indices and generally improved risk appetite.

Dollar pairs climbed broadly in a quiet session for economic data on Monday when the Canadian, New Zealand and Australian dollars featured as the only G10 currencies to notch up gains relative to the greenback.

European currencies were notable underperformers as widespread declines in yields led continental bonds to outperform the US market where rising long-term rates led to a curve steepening that may also have helped the dollar.

Pound sterling was the biggest faller in the G10 basket as Friday's dovish remarks from Bank of England Deputy Governor Dave Ramsden continued to draw buyers into the bond market and sellers of the currency.

Dollar pairs rose and European currencies fell on Monday even as stock markets climbed around the world, suggesting improved risk appetite among investors relative to that seen at times in the last week.

With the economic calendar sparse for the remainder of the session, attention now turns to Tuesday's release of the latest S&P Global PMI surveys of manufacturing and services sectors in developed markets.

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

EUR/USD was trading 0.1% lower at 1.0644 after ebbing from Friday's intraday high of 1.0677, although it had risen off intraday lows near 1.0623 seen around the North American open on Monday.

Euro losses deepened briefly going into the North American open after Bank of Portugal Governor Mario Centeno reportedly said that cuts to European Central Bank interest rates could exceed 100 basis points this year, and that a 2% interest rate target is a good benchmark to aim for. Attention now turns to President Christine Lagarde, who delivers a lecture at Yale University in New Haven around 11:30 ET, and to the release of IHS Markit PMI surveys out on Tuesday.

Elsewhere in Europe GBP/USD was quoted 0.27% lower at 1.2338, making sterling the worst performer among major currencies, after falling further from Friday's closing levels around 1.2373. Monday's losses reflect an even more notable decline from Friday's intraday high of 1.2468 and may be connected to shifting expectations for Bank of England rates.

This is after Deputy Governor Ramsden said on Friday that risks to the UK inflation outlook have shifted to the downside relative to February's forecasts. Those forecasts were conditioned on the assumption that substantial cuts would take Bank Rate down to 3.25%, from 5.25%, over the projection period with initial reductions beginning in either May or June.

Ramsden noted how UK inflation has now fallen below US inflation and could be likely to converge with even lower rates of Euro Area inflation over the coming months. Previously, Governor Andrew Bailey told the International Finance Global Outlook Forum that last week's higher-than-expected March inflation reading still left the economy on track to deliver February's BoE forecast. Financial markets had recently revised down the number of rate cuts expected from the BoE this year with their starting date also deferred from June to August, in line with changes in market pricing of the Fed rate outlook. But the latest remarks from Bailey and Ramsden hinted at scope for divergence between the BoE and Fed over the coming months.

In Asia, USD/JPY was trading 0.09% higher at 154.78, making the yen one of the better performers among major currencies, after briefly retesting last week's 34-year high around 154.78 in the Asia session on Monday.

There was no economic data released overnight in Japan while government officials were uncharacteristically quiet in Tokyo where market attention is now fixated on Friday's monetary policy decision from the Bank of Japan.

National Core CPI surprised on the downside of market expectations last week but BoJ Governor Kazuo Ueda said recent losses could stoke price pressures and lead to a change in BoJ policy further down the road. The yen has since appeared to find a foothold below the 155 area in USD/JPY though no change in BoJ policy settings is expected on Friday.

Back in North America, USD/CAD was trading 0.21% lower at 1.3726 on Monday after falling from intraday highs around 1.3804 in the early hours of the Friday session. Monday's gains made the Canadian dollar one of the better performing currencies in the G10 grouping and were not disrupted by the volley of economic figures released early in the session.

Canadian home prices were unchanged between February and March, according to the New Housing Price Index released on Monday, when consensus estimates suggested they were expected to rise 0.1%. Prices were down 0.4% for the year to the end of February. Meanwhile, producer prices rose 0.8% in line with expectations for March and raw materials prices rose 4.7% last month, a larger increase than the 2.9% uplift penciled in by the consensus.