(Updates with U.S. data, prices, changes byline, dateline, previous LONDON)
* Volatility low, currencies trading in tight ranges
* U.S. existing home sales data in May stronger-than-expected
* HSBC China PMI rises to 50.8 in June from 49.4 in May
* Canadian dollar extends gains after inflation shock
* Euro held back by Draghi comments, poor euro zone data
By Daniel Bases
NEW YORK, June 23 Optimism over China's economic prospects drove the Australian, New Zealand and Canadian dollars higher on Monday, while the euro struggled to make headway after some softer business- sentiment surveys.
Stronger-than-expected May U.S. existing home sales data added to a generally appealing longer-term outlook for the U.S. dollar, although some analysts are waiting for more confirmation which would feed into the tightening bias for U.S. monetary policy.
"The numbers coming in are a little bit better than expected have not really done that much to U.S. yields either. I think we are much more likely to remain rangebound at least in the near-term," said Shaun Osborne, chief foreign exchange strategist at TD Securities in Toronto.
"We are generally a bit more constructive on the outlook for the U.S. dollar overall. But given what the Fed has told us recently, we need to see a bit more data coming through to really tell us which way the policy risks are going to move from here," he said.
Earlier, HSBC's monthly survey of purchasing managers pointed to the first expansion in six months by China's manufacturing sector, which is crucial to the world's growth prospects and demand for a wide range of commodities.
That helped lift the Australian dollar to a 2-month high against the greenback because China is its biggest export market. The Aussie rose to $0.9445 before easing back to $0.9422.
The Canadian dollar hit a five-month high, building on gains from Friday, after surprisingly high inflation and robust retail sales made it look less likely the central bank would maintain its accommodative policy stance.
"There has just been a bit of a risk-on play this morning," said Stephen Gallo, head of European currency strategy at Canadian bank BMO in London. "The Aussie, Kiwi and Canadian dollar all look wrapped up in that."
Gallo said "short" bets on a weaker Canadian dollar - a popular trade over the past year - had been squeezed after the inflation numbers last week.
The Canadian dollar traded at C$1.0738 per U.S. dollar , after touching a high of C$1.0717. The New Zealand dollar rose 0.20 to US$0.8713 against the greenback.
Purchasing manager surveys for Germany, France and the euro zone as a whole were all below forecast. The euro weakened to $1.3593, off slightly on the day.
The trend, however, remained the same: robust growth in Europe's biggest economy and a continuing struggle for some of its neighbours.
The data followed a weekend interview in which European Central Bank chief Mario Draghi laid out the case for sticking with the bank's current programme of stimulus. He also said outright quantitative easing could be used if inflation expectations deteriorated in the medium term.
The dollar dipped 0.15 percent to 101.91 yen. (Additional reporting by Patrick Graham in London, Ian Chua in Sydney, Hideyuki Sano in Tokyo; Editing by Larry King and Nick Zieminski)