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US  Defence Secretary, Esper, is crossing the wires and has said that the response from North Korea was not a positive one, touching on the matter of US Troops and the news that  Trump’s $5 billion demand earlier this month were greeted with shock in Seoul.

Key comments

  • Has not heard of a report to withdraw forces from South Korea.
  • The Indo-pacific is a priority theatre for the US.

FX implications:

The new Pentagon chief is trying to reorient the US  military to make competing with China its top priority, as the United States faces its own daunting challenges both at home and abroad and N Kora remains on the map of ‘bad nations’ for which markets had been roiled by last year.  Trump was heavy-handed in his pursuit of dealing with the N.Koreans whereby he stationed some 28,500 US troops  as a deterrence against the nation which has tested South Korea’s confidence in the security alliance with Washington considering the costs of which Trump demand Seoul to pay – “Reports of Trump’s $5 billion demand earlier this month were greeted with shock in Seoul and on Monda,” Reuters reported, adding, “progressive groups protested at the negotiation venue against what they said was “highway robbery” by “greedy” Americans.

While there are no immediate market implications, it adds to the string of protectionism type of themes emerging under Trump’s presidency which is keeping risk appetite on thin ice which  likely favours the yen as a safe-haven currency.