The US has started sending out its tariff letters (or posting them on social media). However, the market does not seem to be interested in this at all at the moment. The S&P 500 has remained unchanged since the beginning of the week, 10-year US government bond yields are stable between 4.3% and 4.4%, and the US dollar index has gained ground on all four days of this week so far, Commerzbank's FX analyst Volkmar Baur notes.

Markets may expect a weaker USD

"On the one hand, it could be due to the salami tactic. Unlike on 2 April, when the US announced all new tariff rates for all countries at the same time, they are taking a conspicuous amount of time this week. Since Monday, 23 countries have received notification of their new tariff rates, with many more still pending or likely not to receive a letter after all. And in most cases, the ‘new’ tariffs are very similar to those announced on 2 April. Three months ago, that was enough to cause a sell-off on the market. But since the news is coming in slice by slice this time, the market seems to be coping better than it did at the beginning of April."

"On the other hand, it could also be the expectation of another taco that is calming the markets. ‘Trump always chickens out’ has become a catchphrase among traders and describes the fact that Trump has usually withdrawn the high tariff rates he initially announced before or at least shortly after they came into force."

"It makes a difference for the market. If the latter is the case, there could be considerable volatility on 1 August if Trump does not back down this time and the tariffs actually come into force. In the former case, we would probably have to wait for a significant deterioration in fundamental data before the market reacts. I would expect a weaker US dollar in both situations. However, while things could move quite quickly at the beginning of August if there is no taco, the salami argument would suggest a gradual devaluation as soon as the fundamentals deteriorate."