Asian session: Sterling was a notable underperformer

Sterling was a notable underperformer after British Prime Minister David Cameron was forced into a hasty cabinet reshuffle on Saturday following the shock resignation of a senior minister.

Dollar bulls were hit hard after the Fed last week held interest rates steady and cut in half the number of projected quarter-point hikes to just two this year. Fed Chair Janet Yellen also sounded doubtful that a recent firming in U.S. inflation would be sustained, suggesting the central bank is in no hurry to tighten policy.

Euro bulls were not spared either. European Central Bank (ECB) chief economist Peter Praet on Friday said rates have not reached their lower limit yet. His comments came a week after ECB President Mario Draghi upset the market by saying he did not expect further rate cuts were needed after unveiling a fresh set of stimulus. That saw the euro rebound from a low around $1.0821.

The safe-haven yen was broadly firmer on Monday, particularly against its New Zealand and Australian peers, as the mood turned sour with most Asian share markets down. "It is an extension of a slightly cooler mood overall," said Sean Callow, senior currency strategist at Westpac Bank.

A public holiday in Japan and an absence of fresh drivers meant there was no conviction to push the market either way.

EUR/USD: during the Asian session the pair traded in the range of $1.1260-80

GBP/USD: during the Asian session the pair fell to $1.4420

USD/JPY: during the Asian session the pair traded in the range Y111.20-50

Based on Reuters materials