US not considering moving troops out of Iraq – Rabobank

Rabobank analysts note that the latest news this morning underlines the usual efficiency of the Trump administration with a Pentagon letter suggesting the US is indeed considering moving troops out of Iraq subsequently denied by the Secretary of Defence. 

Key Quotes

“There are also reports of 10 B-52 bombers being moved closer to Iran, while an amphibious assault vehicle with several thousand marines is also on the way to the region. Neither of those deployments is more than a tiny fraction of what would be required for a full-on US assault on Iran, of course. Now there is likely to be a nervous waiting game to see how Tehran’s response will be calibrated; and there is still the nuclear issue, which threatens to force even Europe to make a hard choice ahead if weapons-grade uranium enrichment were to proceed apace.”

“It is also worth noting that there is very little Western unity over the US strike on Suleiman. There has hardly been a flood of support from major capitals, and even NATO is prevaricating over whether it would stand behind the US if Iran were to attack it in response. This is a further sign, surely, of the move towards a US-centric foreign policy and away from the ‘international rules-based order’.”

“This is either very USD bullish,…or, if mismanaged, very USD bearish. So far it still seems to be the former, pointing to an FX truth at existential level well above the level of interest rate differentials or fair-value models, or PPP, or whatever other label one wants to put on top of the patently obvious, but far more (geo)political tag of ‘US hegemony’.”