Euro declined on Monday as European debt crisis continued to weigh on the single currency after Spanish central bank seized a local savings bank over weekend. Investors were jittery by such event as weakness in the European banking sector highlighted sovereign debt risk could spread from the public to the private sector.

Despite Friday's strong rebound from 1.2470 to 1.2599, euro was under broad-based selling pressure at the start of Australian trading on Monday , price fell from 1.2586 to 1.2481 in Asian morning as traders were slowly reacting to weekend's news report of bailout by Spanish central bank of one of the local savings bank called CajaSur which ran into difficulty by property loan defaults and this seizure would probably increase the burden on Spain’s finances as the government tries to reduce its budget deficit. Despite staging a minor recovery, the single currency tumbled again in Europe and hit an intra-day low of 1.2345 in NY morning before staging a minor recovery to 1.2417.

Although the British pound rose briefly to 1.4529 in European morning, selloff in euro dragged cable lower and price subsequently tumbled to 1.4352 in the US session. However, cable managed to stage a strong rebound to 1.4464 due partly to cross-buying in sterling vs euro (Eur/gbp fell from 0.8678 to 0.8564). Earlier, British finance minister George Osborne and Treasury minister David Laws outlined plans to cut 6.25 billion pounds of government spending. Bank of England's Miles said inflation should start to fall to 2% target over the next 6 months and indicated eurozone problems pose risks to UK's fragile recovery. Bank of England policymaker Adam Posen also said that the U.K. is not going to get the kind of strong recovery from its economic malaise like Japan did.

Versus the Japanese yen, the greenback opened sharply higher but climbed briefly to 90.75 in the NZ/AUS session. Despite subsequent dip to 89.74, price rebounded from there and spent the rest of the day inside intra-day established as the markets were relatively thin due to European and Canadian market holidays.

Economic data to be released on Tuesday include: U.K. GDP, Import, Export, E.U. Industrial order, U.S. Consumer confidence and house price index.