A USA official, who asked not to be named, said that while periodic activity has been seen at North Korea's Punggye-ri nuclear test site, he had not seen movement there for over a month and there were no current signs of an imminent test.
Despite the threat, US and South Korean militaries launched this year's 11-day training on Monday morning as scheduled.
Bannon named the acting top USA diplomat for East Asia, Susan Thornton, as one official he wanted out.
The US has reduced the number of its participating service members to 17,500 from 25,000, according to the Pentagon.
"Cancelling it would cede into the huge North Korean aim to decouple the allies and drive a wedge between South Korea and the United States", Narang said.
North Korean leader Kim Jong Un visits the Command of the Strategic Force of the Korean People's Army (KPA) in an unknown location in North Korea in this undated photo released by North Korea's Korean Central News Agency.
"I don't know exactly when (it will happen), but a sixth nuclear test is a less risky option for North Korea than firing missiles towards Guam". As it has done in the past, Pyongyang will inevitably insist that the drills are a prelude to an invasion of North Korea.
This has cooled slightly in recent days, with suggestions from North Korea that dictator Kim Jong Un would monitor the actions of the US before launching toward Guam.
"Not long after the Australian prime minister had stated that they would join in the aggressive moves of the United States, even referring to ANZUS which exists in name only, the Australian military announced that they would dispatch their troops to the aggressive nuclear exercises of the USA", a North Korea's Ministry of Foreign Affairs spokesperson said in a statement, released on the eve of the event. North Korea views such exercises as preparations to invade it. The question is how strong it will be.
If this is right, expect the usual propaganda belligerence in state media or low-level provocations like artillery and short-range missile drills.
WASHINGTON-America's diplomatic and defense chiefs sought Thursday to reinforce the threat of possible U.S. military action against North Korea after U.S. President Donald Trump's top strategist essentially called the commander-in-chief's warnings a bluff.
But others think the North might use the drills as an excuse to conduct another ICBM test or maybe even act on its threat to lob missiles into the waters near Guam.
The chairman of the Joint Chiefs of Staff has wrapped up a trip to South Korea, China and Japan that had been planned months ago, but it could not have happened at a better time.
The South Korean president added he was in regular contact with the US, and that Trump's administration had "promised to sufficiently consult with South Korea and get our approval for whatever option they will take against North Korea".
It was very unusual for top USA military generals to gather in South Korea for public statements on the DPRK issue.
Joseph Dunford, chairman of the U.S. Joint Chiefs of Staff, said the exercises were "not now on the table as part of the negotiation at any level".
A civilian group held a surprise rally at the USA embassy in Seoul, demanding that US troops to leave the peninsula.
"In cooperation with other nations, we will continue to employ diplomatic and economic pressure to convince North Korea to end its illegal nuclear and ballistic missile program".
It also came amid high tensions on the Korean Peninsula, with North Korea issuing a batch of fresh warnings over the UFG exercise, a command-post drill where 50,000 South Korean and 17,500 United States troops participated to simulate a war with North Korea.