Blink and you'll miss it. Two weeks ago, markets were fretting about the prospect of all-out war in the Middle East, as Israel and Iran bombed one another. One week ago, global markets were rallying in relief as the oil price cratered following the U.S. attack on Iran's nuclear facilities, and a fragile ceasefire that appeared to be holding.
Now, with a week to go until Trump's July 9 deadline on tariffs, markets have moved on to how long Federal Reserve Chair Jerome Powell can resist pressure from the president to cut interest rates.
Markets are already preparing for a Trump loyalist to replace Powell when his term expires next May. Almost four quarter-point cuts over the next year are now priced into the equation in 2026, up from closer to three just a month ago.
Investors have largely expressed their views on tariffs through the currency market and, as far as forex is concerned, July 9 is shaping up to be just another day at the office.
Implied currency options volatility - a measure of demand from traders to buy protection against large price swings - surged in early April, when Trump unveiled his raft of tariffs on practically every country on the planet, and continued to do so even after he'd hit the pause button on April 9, peaking shortly afterwards.
Since then, volatility has subsided, whether for stocks, bonds or currencies, as investors have become more immune to the president's on-again-off-again approach to trade policy.
And that's no surprise. Having said he would secure 90 deals in 90 days, so far there is just one fairly limited deal in the bag, with the UK.
In fact, Trump's to-ing and fro-ing on tariffs has been so frequent, it's given rise to the acronym TACO, which stands for "Trump Always Chickens Out", something many investors now factor in when placing trades.
Last Friday, Trump said the July 9 deadline was not fixed. "We can do whatever we want," he told reporters at the White House. Then, on Tuesday, he said he wasn't thinking of extending it at all, mentioning Japan as his latest bugbear.
In the face of such dizzying switches, forex traders are assuming there will ultimately be some kind of market-soothing pause, reversal, compromise or general can-kicking while the U.S. administration attempts to hash out agreements.
Implied volatility for euro options expiring on July 9 is around 8.5%, very much in line with its recent range. For comparison, a month ago, the one-month options - which then expired on July 9 - were at exactly this level, while two-month options two months ago were above 9%. Back in early April, at the time of the pause, three-month euro implied volatility topped 10%.
The pattern is virtually identical for all the major currencies that are exposed to tariffs, including the Canadian dollar, Japanese yen and Mexican peso.
It's not just currencies either. The VIX volatility index, known as Wall Street's "fear index", has been trading below the attention-grabbing 20 mark, for much of the last two months following a spike to 60 in early April.
Drilling down, weekly VIX futures that expire on July 9 have drifted into "sanguine" territory, at around 18.65 from a peak above 20 in mid-June, when Israel/Iran hostilities boiled over.
In the run-up to Liberation Day, the weekly VIX futures contract that expired on April 2 hit a top of around 25.
Central bankers, major asset managers, private equity giants, politicians, the heads of the world's largest companies and just about everyone has cited tariffs as the biggest uncertainty facing the world right now.
As always with markets, someone will be right and someone will be wrong. There is still some time to go before July 9.
