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A G-20 meeting ending with "acrimony and threats of further punitive action" is the least likely, according to Sean Callow, Westpac's chief currency strategist. "More plausible but it's still not my basic case, it's a real breakthrough."
A breakthrough, he said, would be a commitment by the United States to eliminate tariffs on $ 267 billion of Chinese imports and suspend the 25% tariffs that were threatened effective January 1, 2019.
Callow said that the "baseline scenario" is something in between, but that it's wrong – big smiles and handshakes … Trump proclaims a big gain for US exporters, but ( with) the key tariff schedule still in place due to negotiations is expected to continue in December ".
If the results were insignificant, the Australian dollar and the Chinese yuan would rebound but not soar, said Callow, adding that the Australian dollar could be firmer by 1% and the yuan by 0.5%.
The Japanese yen is likely to weaken a bit, "if stocks and US yields go up," Callow said. "I'm expecting a fudge – an announcement of a type of agreement that is not very solid when it is scrutinized."
