Commentary by Nordea Banks' global currency strategist Andreas Steno Larsen

Larsen says that China is on the backfoot in the trade spat with the US, and that there are "no good ways to retaliate for China".

He argues that an attempt to devalue the yuan would imply that China has to prop up its dollar reserves and purchase USD assets such as Treasuries. This would mean that China "has no leverage on the dumping Treasuries story".

Adding that China "will not be able to retaliate one-to-one on Trump's tariffs as there is insufficient US exports to impose tariffs on". With that regard, they expect president Xi Jinping's speech tomorrow to calm the situation and that China "will end up at the negotiatons table sooner or later".

An alternative insight by Nordea on the current trade spat, though the one-for-one retaliation is something that BofAML also took note here - arguing that China may target services instead.