The greenback fell broadly against major currency on Monday as Bank of America Corp., the second-largest U.S. bank, reported a 77% drop in first-quarter profit. U.S. currency tumbled against the Japanese yen and Swiss franc from 104.07 to 102.98 and from 1.0206 to 1.0065 respectively.
European Central Bank council member Klaus Liebscher said record oil prices are pushing up wages, increasing the chance interest rates will stay at a six- year high. European Central Bank President Jean-Claude Trichet said eurozone banks face risks from possible worsening of the credit cycle. The single currency rallied from 1.5792 to 1.5948 versus the dollar. Euro also rose sharply against sterling from 0.7897 to 0.8042.
The British pound tumbled from 2.0029 to 1.9776 on Monday due to the release of weak U.K. house prices data. U.K. Rightmove house prices fell by 0.1% in April versus no change in March. Cable also weakened on speculation a Bank of England plan to swap government bonds for mortgage-backed securities won't be enough to revive lending. Lehman Brothers Holdings Inc. recommended that investors sell the pound against the dollar, saying the worst housing slump in 30 years will force the BOE to cut its target lending rate by 1 percentage point to 4% in 2008.
Tuesday will see the release of U.S. exiting home sales, which is expected to decline to 4.92 million in March, from 5.03 million in February. Sales dropped to 4.89 million in January, the lowest level since at least 1999.