According to analysts at Danske Bank, there is relative calm in FX markets ahead of the G20 meeting in Osaka with both the Scandies and USD have been reasonably steady, while the JPY and CHF have strengthened a tad.
Key Quotes
“Expectations have been upped for Saturday’s meeting on trade between Trump and Xi and a ceasefire could temporarily give some tailwinds to risk currencies such as EM and the Scandies and weigh further on the USD. However, central banks are nevertheless still likely to set the tone for currencies heading into Q3 with a range of important policy meetings coming up in July.”
“Today, focus will be on the G20 and on inflation data out of both the US (PCE) and the euro zone (HICP): a key driver of FX markets at present is, in our view, the relative credibility of inflation targets – and notably the ECB is being challenged by the market in this respect and we expect the euro will drift higher if it does not deliver.”
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