What does Monks think that he sees? What reason does Fagin give that it was just his imagination?

He believes he sees a shadow of a woman; Fagin tells him it's his "fancy" because he had locked the door.

"Yonder!" replied the man, glaring at the opposite wall. "The shadow! I saw the shadow of a woman, in a cloak and bonnet, pass along the wainscot like a breath!"

The Jew released his hold, and they rushed tumultuously from the room. The candle, wasted by the draught, was standing where it had been placed. It showed them only the empty staircase, and their own white faces. They listened intently: a profound silence reigned throughout the house.

"It's your fancy," said the Jew, taking up the light and turning to his companion."