Asian currencies jumped on Thursday while most equity markets in the region slipped after the US Federal Reserve flagged possible delays to interest rate cuts this year, as investors awaited inflation data from Indonesia due later in the day.

The Thai baht was the biggest gainer in the region, appreciating 0.6% against the US dollar, while the Singapore dollar edged 0.1% higher.

Among equities, Taiwan stocks fell 0.6% while Philippine stocks slipped 0.8%.

Asian currencies struggle for direction, shares fall; US CPI eyed

Overnight, the Fed held interest rates steady and signalled it is still leaning towards eventual cuts, but put a red flag on recent disappointing inflation readings that could possibly delay rates cuts.

Poon Panichpibool, a markets strategist with Krung Thai Bank, said it would be positive for the emerging Asia markets if the Fed starts cutting rates as expected.

“However, the pace of rate cut and reasons behind the rate cut decision should be scrutinised carefully as well. For instance, if the Fed aggressively cuts rate due to incoming economic recession, that might not bode well for EM Asia markets,” Panichpibool added.

Markets are currently pricing in a 55.1% chance of a rate cut in September, according to the CME FedWatch Tool.

Back in Asia, the Indonesian rupiah advanced 0.4% while Jakarta stocks slipped 1.3% ahead of the country’s inflation data for April due later in the day.

South Korea’s consumer inflation eased in April for the first time in three months, coming in lower than economists’ estimates and supporting market expectations for monetary easing in the latter half of the year.

The South Korean won edged 0.4% higher while Seoul stocks slipped 0.2%.

Both the Malaysian ringgit and equities in Kuala Lumpur edged up 0.1%.

Markets in Mainland China were closed for a public holiday.