background image background image background image

A nervous wait for late June G20 meeting

Forex 5 minutes to read
Picture of John Hardy
John Hardy

Head of FX Strategy

Summary:  Both sides backed away from a fresh rhetorical escalation in the US-China trade negotiation showdown, and it now appears we could be in a nervous holding pattern until the late June G20 meeting if China confirms that Xi Jinping will meet with Trump on the sidelines of that meeting.

One of the worst days of the year for equity markets yesterday elicited hardly more than a nod of the head from the currency market, even as the USDCNY rate, the world’s most important exchange rate, rose the most it has all year – close to 1% at one point yesterday to 6.88.

Trump’s language late yesterday on Chinese retaliation sounded milder than yesterday’s earlier tweets: "There can be some retaliation but it can't be very substantial,". Trump also said he would meet with Xi Jinping at the June 28-29 G20 summit. This likely means that the setup now is that we have a tense stand-off until the meeting, which still looks better than yesterday’s sharp escalation in the two sides’ rhetoric. The lack of further escalation saw a modest bounce in risk appetite overnight, further encouraged by more diplomatic language from China’s side that both sides have “the wisdom” to come to terms. 

The next step is a signal from China that it is amenable to a Trump-Xi summit on the sidelines of the G20 meeting (that could be a difficult ask if taking place under the shadow of fresh US tariffs on a further $300 billion of Chinese imports – might be more promising sign if the US holds back in actually implementing these, only threatening to do so in the event the sides can’t come to terms in late June).

If we do get that signal, market participants may feel emboldened to believe that China will hold the line on the USDCNY for now. Or could we see a tease just to the edge of 7.00 and at times beyond as a negotiating tactic?  In any case, it is difficult to see why we should expect a significant further escalation until late June – leaving everyone hamstrung once again and likely with a directionless market. 


USDJPY has rebounded after yesterday nodding its head to the ugly sell-off in equity markets. Yesterday’s experience reminds us how weak the transmission of traditional risk-off into JPY strength has proven, and it is an interesting sign of half-hearted JPY support that the modest bounce-back in sentiment has seen almost all of yesterday’s sell-off reversed.
Source: Saxo Bank
The G10 rundown

USD – the dollar is standing relatively tall here after yesterday’s weakness within the G3. We should always ignore stories suggesting China will liquidate its treasuries like yesterday’s (note how the modest selling in UST’s on this story was immediately erased as soon as safe haven seeking was afoot.)

EUR – the single currency is stable and seems to remain firm on bouts of risk off, perhaps fed by unwinding of carry trades funded in euros.

JPY – the yen is playing its safe haven role, if somewhat half-heartedly. Likely dampening volatility potential is the lack of a more enthusiastic bid for US treasuries on the recent bouts of weak risk appetite. (the 30-year US yield benchmark has only shifted 15-16 bps top to bottom recently, versus the 55 basis point move lower from the  peak that preceded the JPY flash crash at the beginning of this year.)

GBP – May’s position looks increasingly weak as she faces pressure to exit the scene. This throws in doubt the cross-party talks and raises the uncertainty level on hard Brexit risks.

CHF – a lingering CHF bid here even as risk appetite improves elsewhere- fed by Brexit woes or widening EU peripheral spreads ahead of Parliamentary Elections starting in under two weeks? EURCHF has dropped below the recent range and  the 200-day moving average around 1.1340.

AUD – the Aussie hasn’t recovered in line with the general US-China trade sentiment bump overnight as the employment component of an NAB business conditions survey dropped to -1.2, the lowest reading since early 2016, an ugly decline indeed from the record (since series began in early 1997) highs for the survey over 15 in early 2018.

CAD – USDCAD still lingering in the higher part of the range despite the improvement in sentiment. Oil prices look heavy again despite the latest geopolitical risks on the US’ confrontation with Iran and a possibly related flap over damage to Saudi tankers, etc.

NZD – the kiwi thriving on the AUD weakness, but it is our thesis that this can only be taken so far, as AUDNZD entering the buying zone toward 1.0500. The RBNZ will likely match the RBA cut-for-cut. 

SEK – enjoying the bounceback in risk sentiment and short Swedish rates are pegged near the highs for the cycle after the April CPI today came in matching expectations (2.0% year-on-year for the core and 2.1% for the headline.) First support / pivotal area in EURSEK is the 10.70-60 zone after its recent break higher.

NOK – oil weaker and the NOKSEK pair has mostly reversed its recent break higher – an opportunity for shorts if sentiment remains stable or better and oil prices decline further. 

Upcoming Economic Calendar Highlights (all times GMT)

0830 – UK Apr. Jobless Claims Change
0830 – UK  Mar. Average Weekly Earnings
0830 – UK Mar. ILO Unemployment Rate and Employment Change
0900 – Euro Zone Mar. Industrial Production
0900 – Germany May ZEW Survey
1000 – US Apr. NFIB Small Business Optimism survey
1230 – Canada Apr. Teranet / National Bank Home Price Index
1645 – US Fed’s George (FOMC Voter) to speak
0200 – China Apr. Industrial Production
0200 – China  Apr. Retail Sales

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.