A G-20 meeting ending in "acrimony and threats of further punitive action" is least likely, according to Sean Callow, senior currency strategist at Westpac. "More plausible but still not my base case, is a genuine breakthrough."
A breakthrough, he explained, would be a U.S. commitment to shelve tariffs on the next round of $267 billion of Chinese imports and to suspend the threatened 25 percent tariffs that were set to take effect on January 1, 2019.
The base case, Callow said, "is something in between, but erring on the side of insubstantial — big smiles and handshakes ... Trump proclaiming a big win for U.S. exporters but (with) the key tariffs timetable still in place as negotiations are set to continue in December."
Should the results be insubstantial, the Australian dollar and the Chinese yuan would bounce but not soar, Callow said, adding that the Aussie dollar could be firmer by 1 percent and the yuan by 0.5 percent.
The Japanese yen would probably weaken a bit, "assuming equities and US yields rise," Callow said. "I am expecting a fudge — an announcement of some sort of agreement that isn't very robust when scrutinized."