De-escalation? Trump Says Military Action In North Korea "Not His First Choice"

In yet another attempt at de-escalation by the US, moments ago as president Trump was leaving the White House, he responded to a reporter question on whether there will be military action in North Korea, saying that "it's not his first choice", but adding that "we'll see what happens."

  • TRUMP: WILL HAVE TO SEE WHAT HAPPENS WITH NORTH KOREA
  • TRUMP: MILITARY ACTION IN NORTH KOREA NOT FIRST CHOICE

The announcement prompted a modest relief rally in the USD, as well as a knee jerk reaction across other markets, with gold and Treasurys both ticking lower, while the USDJPY has rebounded by 25 pips to just shy of 109.00.

And some other comments further hinting at descalation:

  • TRUMP LEAVING WH SAYS TO REPORTERS HAD "VERY FRANK & VERY STRONG CALL" WITH CHINA'S XI JINPING

Earlier in the day, Xinhua elaborated on the phone call, making it clear that China will not allow a non-peaceful resolution of the North Korea crisis.

  • CHINA TO STICK TO TALKS, PEACEFUL MEANS ON KOREA ISSUE: XINHUA
  • XI PERSISTENT ON DENUCLEARIZATION ON KOREAN PENINSULA: XINHUA
  • XI, TRUMP EXCHANGE VIEWS ON KOREAN PENINSULA OVER PHONE: XINHUA

More from Reuters:

Korean Peninsula nuclear issue through talks and peaceful means, Chinese President Xi Jinping told U.S. President Donald Trump in a telephone call on Wednesday. 

 

Washington and its allies have said there is a growing urgency for China, North Korea's top trading partner, to apply more pressure on its already isolated neighbour to get it to back down on its nuclear weapons and missiles programmes. China "unswervingly" works to realise denuclearisation on the Korean Peninsula and to safeguard the international nuclear non-proliferation system, Xi told Trump, according to a statement from China's Foreign Ministry. 

 

"At the same time, we always persist in safeguarding peace and stability on the Korean Peninsula and resolving the issue through dialogue and consultation," Xi said. "It is necessary to stay on the path of a peaceful solution." 

 

Xi also said that China attaches importance to Trump's visit to China later this year.

 

The statement cited Trump as saying that the United States was deeply concerned about the Korean nuclear issue and that it valued China's "important role" in resolving the problem.  U.S. Ambassador to the United Nations Nikki Haley accused North Korean leader Kim Jong Un on Monday of "begging for war" and urged the Security Council to impose the "strongest possible" sanctions. 

 

It is unclear if China will back further sanctions. Beijing fears that completely cutting off North Korea could lead to its collapse, unleashing a wave of refugees into China's northeast. China accounted for 92 percent of North Korea's trade in 2016, according to South Korea. China's foreign ministry said on Tuesday it would take part in Security Council discussions in "a responsible and constructive manner".

 

China and Russia have advocated a plan in which the United States and Seoul stop major military drills in exchange for North Korea halting its weapons programmes, but neither side is willing to budge.

 

Trump and Xi last spoke by telephone on Aug. 12. The White House said in a statement at the time that their relationship was "extremely close" and "will hopefully lead to a peaceful resolution of the North Korea problem." 

 

But tensions in China-U.S. ties have increased since Trump took office, with the U.S. president having authorised an investigation into China's alleged theft of intellectual property, and suggesting trade relations would be linked to Beijing's help on North Korea.