The yen strengthened the most on renewed expectations of a Bank of Japan rate hike this month

Most Asian currencies were little changed on Monday as traders parsed a series of weak factory activity readings across the region.

The yen strengthened the most on renewed expectations of a Bank of Japan rate hike this month.

The yuan’s USD/CNY onshore pair was largely unchanged on Monday, while the won’s USD/KRW edged 0.2% higher.

The Indian rupee’s USD/INR pair added 0.2%, while the Singapore dollar’s USD/SGD was largely flat.

The Australian dollar’s AUD/USD pair ticked down 0.1%.

Sentiment was also weighed down by another round of weak manufacturing readings. China’s factory activity slid further into contraction, with both official and private PMIs underscoring the eighth straight month of decline.

The data pointed to subdued domestic demand and weak external orders, extending concerns that China’s recovery remains uneven despite recent policy support.

Japan’s manufacturing sector continued to decline, with the November PMI remaining below the 50-point threshold for a fifth straight month. South Korea’s PMI also contracted again, dragged by soft demand and slowing export momentum.

Amid the mixed signals, the yen’s USD/JPY pair dropped 0.4%, more than most regional currencies, after Bank of Japan Governor Kazuo Ueda signalled that policymakers would consider the “pros and cons” of raising interest rates at the December 18–19 meeting.

Investors interpreted the phrasing as notably hawkish, lifting expectations that the BOJ could deliver its first rate hike since exiting negative rates earlier this year.

The yen firmed toward the mid-155 per dollar range, supported further by a rise in Japanese government bond yields as traders priced in a higher probability of tightening.