FOREX-Yen gains ahead of BOJ meet as investors gird for busy week

(Updates to Asia afternoon)

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BoE, ECB, BOJ set to announce rate decisions

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US nonfarm payrolls, inflation data due

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Yen rises; New Zealand dollar falls

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Trump says leaning towards Warsh or Hassett for Fed Chair

By Rae Wee

SINGAPORE, Dec 15 (Reuters) - The yen rose on Monday ahead of a crucial week which will see rate decisions from major central banks, as well as key U.S. data that could guide the policy outlook for the Federal Reserve in the new year. The Japanese currency was last 0.5% stronger at 155.08 per dollar, extending its gains from earlier in the session after the Bank of Japan (BOJ) said on Monday most of the Japanese companies it surveyed expected to raise wages in fiscal 2026 at about the same rate as in the current year. Bloomberg News, meanwhile, reported that the BOJ was set to start selling its ETF holdings as early as January. Earlier on Monday, a closely watched survey separately showed that big Japanese manufacturers' business sentiment hit a four-year high in the three months to December.

"The data reinforced BOJ rate hike expectations, though markets are already expecting a hike on Friday," said Christopher Wong, a currency strategist at OCBC, who added that attention will be on guidance from Governor Kazuo Ueda regarding future tightening.

"Any meaningful recovery for the yen would require not just the BOJ to follow through with stronger guidance and a show of commitment, but also for policymakers to demonstrate fiscal prudence and for the U.S. dollar to stay soft." Moves in the New Zealand dollar were similarly more pronounced than the rest of its peers on Monday, after the country's top central banker pushed back on expectations of rate hikes next year.

The kiwi last traded 0.36% lower at $0.5781.

Elsewhere, rate decisions from the Bank of England (BoE) and the European Central Bank (ECB) are also due this week. Markets have almost fully priced in a cut by the BoE as still-elevated inflation in the UK shows signs of easing, while expectations are for the ECB to stand pat. Traders have begun speculating that a rate hike could be on the cards for the ECB in 2026. Sterling eased 0.13% to $1.3364, while the euro was down 0.06% at $1.1733. "In terms of the BoE, I think it's going to be very interesting. I think it's going to be a finely balanced decision to cut," said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia.

"The risk is that the inflation data that comes out this week may take out some of the pricing for follow-up rate cuts."

British inflation data is due on Wednesday.

KEY US DATA ON DECK Over in the United States, a host of data delayed by the historic government shutdown is set to be released, giving investors a long-anticipated view of the world's largest economy.

The November jobs report is due on Tuesday, while inflation figures are out on Thursday.

Against a basket of currencies, the dollar held close to a roughly two-month low hit last week and stood at 98.37.

"This upcoming data is somewhat dated as well, and also is affected by the government shutdown, so there's a lot of noise in data," said Sim Moh Siong, a currency strategist at Bank of Singapore.

"From policymakers' perspective... this set of data, whatever the outcome is, they will probably interpret it more carefully than usual. The main thing you want to do is to tease out the trend in terms of the labour market in the U.S.." A divided Federal Reserve cut rates last week, but Chair Jerome Powell signalled borrowing costs were unlikely to drop further in the near term as policymakers await more economic clarity. U.S. President Donald Trump said on Friday he was leaning towards either former Fed Governor Kevin Warsh or National Economic Council Director Kevin Hassett to lead the central bank next year.

In Asia, data on Monday showed China's factory output and retail sales grew at their weakest pace in more than a year in November, compounding challenges for policymakers who are struggling to find fresh ways to keep the $19 trillion economy humming. The Australian dollar, often used as a liquid proxy for the yuan, was down 0.17% to $0.6643, though the onshore yuan strengthened to a more than one-year high of 7.0497 per dollar.

(Reporting by Rae Wee; Editing by Shri Navaratnam and Kate Mayberry)