The greenback strengthened versus other major currencies in thin market condition as U.S. market closed on President's Day holiday, some traders booked profit on recent short dollar positions after last week's decline as investors expect the Fed may cut rates more aggressively after the series of soft U.S. economic data released (consumer sentiment dropped to a 16-year low).
The British pound took the lead after rebounding in Asian morning and tumbled to 1.9475 on news that British government had decided to nationalise U.K. fifth largest mortgage lender Northern Rock, which added to worries about the health of the Britain's economy. The Northern Rock developments overshadowed a sterling supportive report from Rightmove that asking prices for houses in England and Wales rose in the latest month. The property website said asking prices for houses posted their first acceleration since October last year, rising by an annual 5.8 percent in February.
The single currency fell in tandem with sterling to 1.4611 in European session on dollar's broad-based rebound, however, the pair found good buying interest from Asian sovereign names above 1.4600 level and rebounded in late trading. The buck also rose against Japanese yen and Swiss franc to as high as 108.33 and 1.1048 respectively.
Elsewhere, the aussie surged to a 3-month high of 0.9142 on investors' expectation that the Reserve Bank of Australia (RBA) will raise rates from current 11-year high of 7 percent early next month. On the other hand, analysts are betting the Fed may take another 0.50 percent rate cut at next FOMC meeting in March. Some traders are awaiting the release of RBA board meeting minutes to be released on Tuesday 00:30GMT for confirmation.
On Tuesday, U.S. investors will return after long weekend and on the data front, Canadian inflation data will be released at 12:00GMT whilst U.S. NAHB housing market index is scheduled at 18:00GMT...