* Yen climbs on expectations of global interest rate cuts
* Rate decisions by BoE, ECB, RBA, RBNZ expected this week
* Aussie drops on mounting expectations of a hefty rate cut
* U.S. jobs data also in focus
By Kaori Kaneko
TOKYO, Dec 1 (Reuters) - The yen advanced against other key
currencies on Monday on expectations that central banks in major
economic zones will cut interest rates this week to limit the
damage from the global financial crisis.
Central banks including the Bank of England, the European
Central Bank, the Reserve Bank of Australia and the Reserve Bank
of New Zealand review interest rates this week.
The Australian dollar fell against the dollar and the yen
after fresh domestic data confirmed the economy was facing a
sharp downturn and bolstered chances of a hefty 100 basis point
rate cut by the Australian central bank on Tuesday.
Investors refrained from building large positions ahead of
these meetings but the Japanese currency looked set to hold its
broad strength in case any central banks surprise with larger
cuts than forecast, which would further erode the interest rate
advantage of their currency against the low-yielding yen.
"The expected rate cuts will likely lead investors to sell
cross/yen, which may also limit the dollar's upside against the
yen," said a trader at a Japanese bank.
"But the reaction in currency markets is likely to be
short-lived as other measures are needed to deal with the current
economic deterioration. Monetary policy steps are not enough to
help the economy," he said.
A 1.4 percent fall in Tokyo shares on recession concerns also
fuelled investor risk aversion, supporting the yen against other
assets.
The dollar fell 0.3 percent to 95.20 yen <JPY=> from late
U.S. trade on Friday, while the euro fell 0.5 percent to 120.70
yen <EURJPY=>.
The European single currency also slipped 0.1 percent against
the dollar to $1.2681 <EUR=> after falling earlier in the day to
as low as $1.2620.
The Aussie slid 1.2 percent to $0.6576 <AUD=D4> after data
showed Australian inflation was slowing much faster than earlier
thought while manufacturing activity hit record lows in November,
strengthening the case for a steep cut in interest rates this
week.[]
Against the yen, it dropped 1 percent to 61.65 yen
<AUDJPY=R>.
The RBA holds its monthly policy meeting on Tuesday and is
considered almost certain to cut its 5.25 percent cash rate by at
least 75 basis points.
EYE ON DATA AND AUTO RESCUE
Following a flurry of dismal economic data in the United
States last week, investors will also be keeping an eye on a key
jobs report this week that is expected to provide further
evidence of deepening economic distress.
The Institute for Supply Management releases its November
manufacturing index later in the day. Economists in a Reuters
survey expect a reading of 37.0 from 38.9 in October.
"It will be hard for the dollar to move higher as the market
has already factored in more evidence of an economic downturn,"
the trader said.
Market players are also keen to see whether struggling U.S.
automakers win government financial support.
"Even if lawmakers approve the rescue plan, it will likely
raise concerns about the financial status of the U.S. after the
aggressive steps already taken, likely putting selling pressure
on the dollar," said Yousuke Hosokawa, senior treasury department
manager at Chuo Mitsui Trust and Banking.
Automakers are due to report on Tuesday their November U.S.
sales, which are expected to have dropped by some 30 percent from
a year earlier.
U.S. lawmakers are soon scheduled to reconvene to review
restructuring plans submitted by the U.S. automakers and consider
their request for a $25 billion rescue plan. []
(Additional reporting by Satomi Noguchi; Editing by Edwina
Gibbs)
