Cohn Shocker

By Stephen Innes

The morning Whitehouse shocker is that Gary Cohn is resigning as head of the White House's 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 denuclearisation 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 and continues to perform exceptionally well on that narrative. But prices will remain firmly supported on the tariff tail risks from Cohn's 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, doubling analysts' expectations. Early trade WTI prices remain tentatively supported by the weaker dollar. But with the overhang from the Cohn resignation yet to filter through the 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 denuclearisation.

Currency Markets

Japanese Yen

A bit of a topsy-turvy 24 hours for USDJPY. It spiked on the Korea headlines from 105.90 towards 106.40, which was pips shy of the significant 106.50 support, but is back plumbing the depths this morning, as tariffs are back in play on the back of Cohn's resignation.

US politics is an absolute mess, inspiring little confidence in the President, and as this real-life political melodrama unfolds, it is hard to avoid parallels for Trump with the TV show The Apprentice.

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 denuclearisation if the safety of its regime is guaranteed.

The prospect of trade tariffs is raising its 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.

Comments

[1504661]

The market didn't decline on the news of Cohn's resignation,
the market dipped because there is now one less competent person in the white house.

The true shock will be what fool replaces him. Whoever fills his shoes will have to swear lifetime unconditional allegiance to the Orange Emperor, so that means they wont have the best interest of country at the forefront of their mind. slow motion train wreck.

[SouthBySE]

How is Cohn resigning bearish?

He was COO of a firm that was unable to manage it's counterparty risk
going into the 2008 crisis.....a simple task that requires only adding
up your exposure to various trading counterparties.

[1504661]

before you bash him, tell us if you've been able to earn 300 million net worth over your career? I guess if you cant run with the big dog's, then it's popular to berate them as best you can.

[Three Cheese Fondue]

he may not have earnt 300 million dollars but perhaps he can use an apostrophe correctly

[San Marzano]

Great post. He's staff, not the pres.

[NRL Capital]

Not a shocker; not many people other than the severely sycophantic will put up with the Orange Emperor. He needs to alienate as many as possible so he can say he did alone if he succeeds or that everyone was incompetent and bailed out if he fails.