The greenback rose strongly against the euro on the last trading day of 2007 after an industry report showed sales of previously owned homes unexpectedly increased last month. Purchases of existing homes in the U.S. rose unexpected by 0.4% in November to an annual rate of 5 million from a revised 4.98 million pace in October,

The single currency tumbled from 1.4748 to 1.4569 against the dollar on Monday due to active selling by CTA ahead of the year-end. Cable reversed early gains in European morning and tumbled from 2.0103 to 1.9815. Thin liquidity also exaggerated market moves on Monday as Japanese and several European financial markets were closed. The greenback rebounded against the Swiss franc from 1.1226 to 1.1372.

Interest-rate futures showed a 94% chance that the U.S. central bank will cut the target rate for overnight lending between banks a quarter-percentage point from 4.25% at its Jan. 30 meeting, increased from 76% chance a week ago.

The greenback fell against the Japanese yen from 112.69 to 111.30 on active cross buying in jpy due to the selloff in U.S. stocks market (Dow Jones index closed down 101 points). Euro, aussie and sterling tumbled versus the Japanese unit from 165.75 to 162.47, from 98.79 to 97.67 and from 224.91 to 221.42 respectively.

Australian dollar and New Zealand dollar also retreated versus the U.S. currency from 0.8828 to 0.8744 and from 0.7787 to 0.7650 respectively. The greenback rebounded strongly against the Canadian dollar from 0.9766 to 0.9989.

All major financial centers will be closed on Tuesday for the New Year's Day holiday. Wednesday will see the release of German, eurozone and U.K. PMI manufacturing respectively, U.K. Halifax house prices, U.S. ISM manufacturing and construction spending.