This morning's White House shocker is that Gary Cohn is resigning as head of the National Economic Council. His resignation increased the risk tenfold that President Trump will follow through with far-reaching trade tariffs given that Cohn was said to be remaining in his role to convince Trump to reverse his trade policy views, or at least temper them.
Predictably, USDJPY is wearing the initial brunt of the move, and in general, the Cohn announcement is reversing the positive risk sentiment from the unexpected news from North Korea after reports that North Korea is open to denuclearisation if the safety of its regime is guaranteed.
While the world appears to be in a safer place this morning due to the denuclearization olive branch offered by North Korea, the market is no less safe from the wrath of Trump’s trade policies.
Gold Prices
Gold was trading positively overnight on the back of the softer USD trend BS continues to perform exceptionally well on that narrative. But prices will remain firmly supported on the tariff tail risks from Cohn departure as the tariff gambit hits the market again with blunt force.
Oil Prices
What goes up must come down or the opposite in the case of US oil inventories data. The American Petroleum Institute (API) reported a considerable build of 5.661 million barrels for the week ending March 2, e doubling up analysts expectations. In early trade, WTI prices remain tentatively supported by the weaker dollar. But with the overhang from the Cohn resignation yet to filter through markets, risk aversion could see oIl prices move lower during today's session.
Overnight long USD hedges were unwound on the news from South Korea that North Korea was willing to hold talks with the United States on denuclearization
Currency Markets
Japanese Yen
A bit of a topsy-turvy 24 hours for USDJPY spiked on the Korea headlines from 105.90 towards 106.40, which was pips shy of the significant 106.50 support. But it's back plumbing the depths this morning as tariffs are back in play on the back of Cohn’s resignation.
US politics are an absolute mess inspiring little confidence in the President, and as this real-life political melodrama unfolds, it's hard to avoid parallels with Trump's TV show, The Apprentice.
The Malaysian Ringgit
Decision day for the BNM but the market is expecting few if any fireworks. Regional currency sentiment received a boost after surprising news that North Korea is open to denuclearization if the safety of its regime is guaranteed.
The prospect of trade tariffs is raising their ugly head again, but when all is said and done, these tit-for-tat tariffs are not significant enough factor to weigh on MYR sentiment let alone derail the buoyant global growth narrative.