The dollar fell from a one-month high against the euro as stocks declined amid concern losses in U.S. credit markets may widen.
U.S. consumer spending rose 0.6% in June following a 0.8% increase in May, the Commerce Department said. The median forecast of economists was for an increase of 0.4%.
The Fed's preferred price gauge, known as the core measure which excludes food and fuel, rose 0.3% last month after a revised 0.2% May gain. The median forecast was for a 0.2% increase.
Policy makers will keep their target rate for overnight loans between banks at 2% when they meet Tuesday.
The pound fell against the euro for a third day and dropped versus the dollar after an industry report showed the U.K.'s construction industry shrank in July at the fastest pace in 11 years.
The Australian dollar has taken a big hit as investors have been caught off guard by a sharp shift in expectations towards interest rate cuts, tumbling nearly 3 percent against the dollar and yen last week for its biggest weekly drop since the Bear Stearns collapse in March. Traders said the Aussie likely had more room to fall as market players come around to the view that the Reserve Bank of Australia, which holds a policy meeting on Tuesday, could start cutting interest rates before long.

EUR/USD tested $1.5620/30, but failed to set above the figure and back off to $1.5560. Later rate resumed decline and fell to session low on $1.5525.
GBP/USDfellfrom$1.9755. Rate broke thought $1.9700 support and after triggering some stops fell to $1.9600. Rebound to $1.9635 was short-lived and pound refreshed session lows around $1.9580.
USD/JPY rose from Y107.44 to Y108.30. Later rate set stable within the Y108.10/30 range.

In Europe today PMI will come from EU countries, including UK.
But the main focus is on FOMC’s decision on Fed’s rate at 18:15 GMT.
BeforeFOMCnon-manuf. ISMindexwillcome. Analysts predict index rose to 51,0 points versus 48,2 points month earlier.

Stock market fixing:
Nikkei 225 -161.41 -1.20% 12,933.18
Topix -24.68 -1.90% 1,248.25
CAC -33.71 -0.78% 4,280.63
FTSE -34.50 -0.64% 5,320.20
DAX -46.65 -0.73% 6,349.81
Dow -42.17 -0.37% 11,284.15
NASDAQ -25.40 -1.10% 2,285.56
S&P -11.29 -0.90% 1,249.02
10yr Note +0.2400 +0.061% 3.972%
NYMEX Crude Oil -3.69 -2.95% 121.41
Gold -9.60 -1.05% 907.90

Japan stocks dropped, sending the benchmark Topix index to a more than three-month low, after profit fell at Mitsui & Co. and Olympus Corp., and U.S. car sales declined to the lowest in more than a decade.
Mitsui, Japan's second-largest trading company, tumbled to the lowest in almost four months, while camera maker Olympus fell the most since May 9. Nissan, Japan's third-largest carmaker, sank to a five-year low after net income fell more than analysts expected while Mazda Motor Corp. plunged the most in more than six years. Kansai Electric Co. led utilities higher as demand grew for companies that can weather an economic slowdown.
The Nikkei lost 1.8% last week amid weaker-than- estimated earnings from Sony Corp. and NEC Corp. Among Topix- listed companies announcing quarterly results in the month through Aug. 1, some 473 posted a decline in net income with 326 reporting an increase.
Olympus slumped 5.2% after the company said on Aug. 1 first-quarter profit plunged 63 percent amid slumping prices for digital cameras. JPMorgan Chase & Co. cut its rating on the stock to ``underweight'' from ``neutral.''
Nissan fell 4.8%, the lowest level since March 2003. The shares are also lower than when Carlos Ghosn was named chief executive officer of the company in June 2001. The company said on Aug. 1 net income dropped 43 percent to 52.8 billion yen ($492 million) in the first quarter due to a writedown on leased vehicles and a stronger yen. Three brokerages cut their price targets on the company. Meanwhile, U.S. auto sales tumbled 13% in July, pushing the industry toward its worst year since 1993.

European stocks fell for a third day as a report showed the biggest jump in U.S. consumer prices since 2005, HSBC Holdings Plc posted an increase in bad-loan charges and a drop in metal prices sent mining companies lower.
HSBC declined after Europe's biggest bank said it set aside more money for bad loans in the U.S. Fortis slumped as the Belgian financial-services company said the difficult economic environment ``will remain.'' Kazakhmys Plc led a retreat in mining companies after copper sank to a five-month low.
BNP Paribas SA helped trigger the global credit seizure a year ago this week after France's largest bank by market value halted withdrawals from three funds invested in subprime debt. Financial shares in the MSCI World Index have since tumbled 30 percent as a group.
HSBC retreated 1.1%. The bank said first-half profit fell 29 percent as it set aside more money for bad loans in the U.S. HSBC also reported a 29% drop in first-half profit.
Fortis sank 3.6%. The Belgian financial-services firm that ousted its chief executive officer last month said second-quarter profit declined 49% on credit-related writedowns.

Stocks on Wall Street closed lower Monday as investors mulled mixed readings on the economy a day ahead of the Federal Reserve's policy meeting.

The Commerce Department reported that personal spending and income edged higher in June. Individual income increased by 0.1% after a revised 1.8% jump in May, matching economists expectations. The increase was due in part to the government's economic stimulus plan, which included billions of dollars in rebate checks sent to Americans in May and June. Personal spending increased by 0.6%, topping the 0.5% increase that economists had expected. When adjusted for inflation, however, individual spending actually fell 0.2% following a 0.3% increase in May.
Among corporate news: Europe's largest bank, HSBC, said Monday that profits fell 29% through the first half of the year, the most since 2001, due to bad U.S. mortgages.
Chrysler said on Sunday that its financial unit had renewed lines of credit totaling $24 billion. The privately-held automaker had originally sought $30 billion in credit.