JP Morgan: Potential Gainers and Losers of US-China Tensions

The US-China tensions aren’t new. However, the intensity and its manifestations certainly are. From trade and technology to geopolitics and capital flows, the world’s two largest economies have clashed on several fronts. And this is bound to affect the global economy and, by extension, the financial markets. Here’s all that you need to know to refine your forex trading strategy.

US-China Tensions and Their Impact on the Global Economy

JP Morgan anticipates policy uncertainty as tariff tensions between the US and China remain a prominent risk and new facets of the US-China rivalry emerge. For instance, the US Congress has passed the National Defence Authorisation Act (NDAA) for fiscal year 2025, which urges the Pentagon to re-evaluate whether BOE Technology Group needs to be listed as a Chinese military company. In an attempt to disrupt military operations, China retaliated by tightening controls to limit the export of critical minerals to the US.

This could affect trade flows and the global economy in the following ways:

• There remains a 40% probability of recession since global business sentiment is deeply impacted by the hostilities between the Red Dragon and the US. 
• Global growth is expected to remain sluggish, and inflation may rotate to the US from the EU. Against an inflationary backdrop, the Federal Reserve (Fed) could delay its next rate cut to December. However, US growth is forecasted to remain sub-trend, at 1.3% during the second half of 2025, significantly downgraded from the earlier prediction of 2.0%.
• Global biotech companies are shifting to politically neutral destinations in the APAC region, such as Singapore, which may become the new innovation hubs. This may drive more investments in the region.
• Excessive tariffs could redirect Chinese exports away from the US to the EU. As a result, Chinese imports to the EU could surge by up to 10% by 2026.
• As the tech-war intensifies, newer, cheaper tech solutions, much like DeepSeek, could be expected to send shockwaves across the Silicon Valley, even as Beijing adopts growth-aligned fiscal and monetary policies.

Forex Forecasts Amid the US-China Tensions

Here’s a round-up of currencies that may strengthen and weaken as the tiff between the world’s two largest economies deepens:

JP Morgan is bearish on the greenback. Despite high interest rates, moderation in US growth and growth-oriented policies in the APAC and EU could potentially exert downward pressure on the USD. Consequently, the USD may decline against major currencies, such as EUR, JPY and GBP. JP Morgan expects the EUR/USD, USD/JPY, GBP/USD and USD/CNY to reach 1.20, 140, 1.40 and 7.15, respectively.

Commodity currencies like the AUD/USD and USD/CAD may remain range-bound, while the NZD/USD is expected to surge.

Emerging market currencies might outperform the USD. Given that the US has high debt and its currency remains overvalued, the period of exceptional US growth seems to have come to an end.

• The Singapore dollar and the Indian rupee may strengthen due to the potential of the two nations as innovation hubs. The SGD surged 13% against the US dollar in June 2025 and remains the strongest Asian currency. However, due to cooling inflation, Singapore’s interest rate may be lowered further, which may weigh on the demand for the Singapore dollar.
• With the increasing role of Taiwan in the semiconductor industry, the demand for the Taiwan dollar may also increase.

As the USD weakens, the demand for alternative safe-haven currencies, such as the CHF and JPY, may surge, creating trading opportunities.

As the US takes a stiff tariff stance, the country’s energy trade relations may remain strained. The Russian ruble, which had surged 42.37% year-to-date by August 4, may continue to grow stronger, supported by the oil demand from the APAC.

The Chinese Renminbi can be expected to remain volatile as trade flows shift and the country’s fiscal policies take shape to boost economic growth.

Strategies for Trading Forex Amid Uncertainties

Here are some of the strategies to trade FX amid high macroeconomic uncertainty against the backdrop of US-China tensions.

Explore Alternative Safe Havens

Diversification is the ultimate saviour against market uncertainties. It spreads risk, gives you peace of mind and minimises losses. With the top safe haven currency, the USD, set to remain under pressure, diversifying into alternative safe havens, such as the JPY and CHF, are likely to gain popularity. 

Trust the Age-Old Wisdom

Diversifying into precious metals, such as gold and silver, could help hedge your portfolio against a slowdown in broader global economic growth. Precious metals are considered stores of value and can protect your portfolio against recession as well as currency declines.

Explore Forex Trading with CFDs

Derivative instruments, such as contracts for difference (CFDs) allow you take advantage of rising and falling currency prices. With CFDs, you only speculate on the direction and extent of price movement, and not the actual price. So, whether the currency of your interest rises or declines, you can continue trading with CFDs.

Trade the News

Being active 24-hours, the forex market is highly sensitive to news updates. Staying informed allows you to respond quickly to major news breaks. You can take appropriate positions to take advantage of breaking news and economic releases or hedge your portfolio against potential risks as the markets digest unpleasant information. 

To Sum Up 

• The US-China tensions remain a central risk to global growth and a source of shock to forex trading.
• Global and US growth may remain subdued, while the APAC and EU regions may exhibit robust economic growth.
• The USD and CNY may remain under pressure, given the mutual hostility between their two nations.
• The SGD, CHF, JPY, NZD and RUB may strengthen against the USD as tensions escalate.   
• Incorporating diversification, trading via CFDs and news-trading can strengthen your forex trading strategy to take advantage of the ongoing US-China situation.

Disclaimer:

All data, information and materials are published and provided “as is” solely for informational purposes only, and is not intended nor should be considered, in any way, as investment advice, recommendations, and/or suggestions for performing any actions with financial instruments. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation or needs, and hence does not constitute as an advice or a recommendation with respect to any investment product. All investors should seek advice from certified financial advisors based on their unique situation before making any investment decisions in accordance to their personal risk appetite. Blackwell Global endeavours to ensure that the information provided is complete and correct, but make no representation as to the actuality, accuracy or completeness of the information. Information, data and opinions may change without notice and Blackwell Global is not obliged to update on the changes. The opinions and views expressed are solely those of the authors and analysts and do not necessarily represent that of Blackwell Global or its management, shareholders, and affiliates. Any projections or views of the market provided may not prove to be accurate. Past performance is not necessarily an indicative of future performance. Blackwell Global assumes no liability for any loss arising directly or indirectly from use of or reliance on such information here in contained. Reproduction of this information, in whole or in part, is not permitted.