The greenback tumbled versus the Japanese yen from 105.54 to 104.02 on active cross buying in jpy on Monday after Standard & Poor's cut ratings on three big U.S. securities firms and a British lender gave a grim assessment of the UK mortgage market, adding fears of more pain from the global credit crisis.

The credit ratings of Morgan Stanley, Merrill Lynch & Co. and Lehman Brothers Holdings Inc. were lowered by Standard & Poor's. S&P said the outlooks on the large financial institutions sector were now predominantly negative. U.S. dollar also tumbled versus Swiss franc from 1.0448 to 1.0326 on active cross buying in chf.

The British pound fell sharply from 1.9827 to 1.9597 after Bradford & Bingley Plc, the U.K.'s biggest mortgage lender to landlords, said it will sell shares at a 33% discount. Euro rose against sterling from 0.7839 to 0.7930.

The single currency fell initially against the U.S. currency to 1.5487 after the release of robust U.S. ISM manufacturing data which came in at 49.6 in May, much higher than the expectation of 48.5 and the previous month’s reading of 48.6, however, euro rebounded to 1.5590 due to dollar’s weakness against majors currencies.

Federal Reserve Bank of Atlanta President Dennis Lockhart said it is soon to declare turmoil in financial markets over and while the U.S. economy should gradually recover. The path of the economy is still enveloped in considerable uncertainty, and serious risks remain. Lockhart said Federal Reserve interest rates currently are correctly calibrated for the U.S. economy and it will take time for the effects of recent cuts to make themselves felt.

Tuesday will see the release of U.K. PMI construction, eurozone GDP, PPI, U.S. revised durable goods, factory orders and U.K. nationwide consumer confidence.