(Updates to morning US trading)

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BOJ report shows many board members saw need for rate

hikes

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Fed minutes highlight thin data calendar

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US pending home sales jump

By Chuck Mikolajczak

NEW YORK, Dec 29 (Reuters) - The yen strengthened on

Monday and was on track for its fifth gain in six sessions as

markets weighed the timing of additional interest rate hikes in

Japan and the chances of ‌intervention in thin holiday trading.

Bank of Japan policymakers debated the need to continue raising

rates, the minutes from its policy meeting earlier in December,

when ​the central bank hiked its policy rate to a 30-year high of

0.75% from 0.5%, showed on ‍Monday.

Finance Minister Satsuki Katayama said last week that Japan has

a free hand in ⁠dealing with excessive moves ⁠in the yen, and

similar statements from officials have helped stem the softening

in the Japanese currency against the dollar recently.

"The conditions for intervention ‌don't exist right now and

those conditions would be dramatic ​price action or high

volatility... since they hiked rates, it has chopped around a

bit, but I don't think the threshold's there," said Marc

Chandler, chief market strategist at Bannockburn Capital ⁠Markets

in New York.

"The market is focused on next ‍year, people who ​are trading

today and tomorrow are sort of last minute kind of things, they

tend to be small orders and people who have to do them, so I

won't take much of a ‍signal from this, we've been consolidating

for a few days."

The dollar index, which measures the greenback

against a basket of currencies, shed 0.05% to 97.99, with the

euro up 0.08% at $1.1781. Sterling weakened 0.02%

to $1.3492.

Against the Japanese yen, the dollar weakened 0.26%

to 156.14.

In a note on Monday, Torsten Slok, chief economist at Apollo

Global Management in New York, said the yen has traded much

weaker than interest rate differentials alone would suggest over

the past ​six months, "indicating ‍that growing concerns about

Japan's fiscal position in a rising rate environment are

starting to dominate."

Despite the rate hike at the BOJ's December 19 meeting, the yen

weakened to a one-month low ​of 157.77 per dollar, prompting

intervention warnings. Japan last stepped into markets to defend

its currency in July 2024, buying yen after the currency hit a

38-year low of 161.96.

The economic calendar is thin in most markets ahead of the New

Year holiday, although U.S. data showed pending home sales rose

3.3% last month after an upwardly revised 2.4% gain in October,

the National Association of Realtors said. The index tracking

sales rose to its highest level since February 2023.

Tuesday will bring about the ​release of minutes from the

Federal Open Market Committee's meeting earlier this month in

which the U.S. central bank cut rates and projected just one

more reduction for next year, although markets have priced in

roughly two more.

In cryptocurrencies, bitcoin fell 0.11% to

$87,447.04.