Asian Currencies May Stall as Jackson Hole Looms

Investors will be watching a series of key Asian central bank decisions and inflation reports this week, as regional currencies rally to annual highs.

The Bank of Korea is set to announce its rate decision on Thursday, followed by inflation data from Japan and Singapore on Friday.

The U.S. dollar's slide resumed from last week, with markets embracing a risk-on sentiment. The yen climbed past 146 per dollar, marking its strongest level in nearly two weeks. Further selling could open up the 140.450 mark.

However, Bank of America sees the upcoming Jackson Hole symposium as a game-changer, with Fed Chair Powell possibly striking a more hawkish tone, which could strengthen the dollar. This could make the Asian currencies trades interesting considering the risk-on sentiment that has helped push them to multi-month and yearly highs.

The South Korean won has surged to a five-month high, as the central bank is unlikely to cut interest rates this week. The BOK is expected to maintain its policy rate at 3.50%.

The Singapore dollar has also extended its gains, reaching an 18-month high.