The New Zealand dollar dropped 0.43% to $0.5777, while the yen gained 0.3% to 155.39 per dollar

Currencies mostly held tight ranges in Asia trade, as investors braced for a busy week.

The New Zealand dollar declined 0.43% to $0.5777, after the country’s top central banker on Monday pushed back on expectations of rate hikes next year. Reserve Bank of New Zealand Governor Anna Breman reiterated the forward path for the benchmark official cash rate in last month’s monetary policy statement, which indicates a slight probability of another rate cut in the near term.

I guess that slight risk of a cut caught NZD longs off guard, said Christopher Wong, a currency strategist at OCBC.

The yen strengthened after a closely watched survey showed on Monday that big Japanese manufacturers’ business sentiment hit a four-year high in the three months to December.

The currency gained 0.3% to 155.39 per dollar. The survey outcome reinforced expectations that the Bank of Japan (BOJ) is poised to raise rates later this week, though attention will be on guidance from Governor Kazuo Ueda regarding the future rate-hike path.

We’ve long expected a hike in December, but I think it’s going to be a dovish hike, said Joseph Capurso, Commonwealth Bank of Australia’s (CBA) head of foreign exchange, international and geoeconomics. In Japan, you have a prime minister that clearly doesn’t like rate hikes, and you’ve also got a governor that is very cautious.

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 drifting downwards, while expectations are for the ECB to stand pat.

Traders have also begun speculating that a rate hike could be on the cards for the ECB in 2026. Sterling dropped 0.15% to $1.3360 in early Asia trade on Monday, while the euro was down 0.03% at $1.1736.