Are China and the U.S. breaking diplomatic ties? A new Cold War? Attention to Trump’s remarks! "Key points and event schedule for May 15"

Yesterday was a market that oscillated in response to President Trump's remarks.

With strong-dollar remarks, the USD/JPY spiked, and sentiment toward China became harder, leading to a stock market decline and a drop in the USD/JPY as expectations of confrontation with China intensified.

As the impact of the coronavirus is waning, attention is shifting to the U.S.-China relationship as a replacement focus.

U.S.-China relations = days of being moved by Trump’s statements have returned.

In such times, what happens over the weekend is unpredictable.

Weekend risk is increasing, so I would like to ensure proper position adjustments.

◎ Today's Points of Focus

1) U.S.-China relations

There are many issues with Australia-China, Europe-China, UK-China, Taiwan-China, and Japan-China relations, but around the coronavirus an encirclement is forming.

However, if an encirclement forms, China will take countermeasures even more.

Moreover, the most important aspect of the U.S.-China relationship is the U.S.-China relations themselves.

Regarding the U.S.-China agreement, China says it will postpone imports of agricultural products that the U.S. says should be favorable unless the U.S. creates a good atmosphere.

This week, the U.S. was expected to announce the status of the agreement’s fulfillment, but at present it seems unlikely that it will be fulfilled.

President Trump has taken a hard line toward China, saying, "I don’t want to talk to Xi Jinping right now," "Is a complete rupture with China possible, and what would happen if it occurred?""He is closely watching Chinese companies listed in the U.S." and other comments have been made.

With worsening U.S.-China confrontations over responsibility and compensation for the coronavirus, as well as issues with the fulfillment of the U.S.-China agreement, human rights issues in Xinjiang Uyghur Autonomous Region and Hong Kong, China’s actual control over the South China Sea, the Senkaku/Diaoyu and Spratly Islands, and 5G rivalry, U.S.-China relations appear to be developing into a new Cold War.

If we think of it as a Cold War, the rupture statements may be understandable, and actions beyond yesterday’s remarks would not be surprising.

Today as well, I will pay attention to President Trump’s statements and China’s responses.

As the impact of the coronavirus retreats and the risk-off sentiment recedes, new risk-off factors may emerge.

2) Europe

Today, indicators are being released in Europe.

Of particular note are the flash GDP figures for Germany and the euro area for the 1st–3rd quarters.

These are the GDP flash figures for two sides that are at odds over monetary policy, so I am looking forward to them.

Germany and the ECB are still at odds, with a standoff continuing.

The ECB is not expected to bend, and if Germany does not bend, Germany’s participation in easing policies may not occur.

If Germany does not participate in the easing measures, the ECB’s policy would be hollowed out, which would be negative for the euro.

I am watching to see whether Germany will take a hard stance.

◎ Today's Event Schedule

Friday, May 15

11:00　CNY　China Industrial Production and Retail Sales

15:00　EUR　Germany GDP (Q1–Q3) (Flash Estimate)

15:45　EUR　France HICP (Consumer Price Index)

18:00　EUR　Italy HICP (Consumer Price Index)

18:00　EUREurozone GDP (Q1–Q3) and Employment Statistics

21:30　USDU.S. Retail Sales

23:00　USD　University of Michigan Confidence Index

02:00　USD　Baker Hughes Rig Count

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