Dollar's safe haven status continues to lose appeal - SocGen

Societe Generale highlights that the dollar's safe haven status has been undermined by various factors as we begin the new year. A steady flow of US-initiated geopolitical surprises and Trump's clear support for lower interest rates are creating significant headwinds for the currency. These dynamics have called into question the independence of the Federal Reserve. Despite positive US growth, widening rate differentials, and sizable net short positions in the dollar, investor confidence remains weak, as evidenced by gold's strong performance and significant gains over the past year. Moreover, among G10 currencies, the Australian dollar is noted as the most constructive long position, with Societe Generale advocating bullishness even amidst broader geopolitical uncertainties. The firm highlights the Reserve Bank of Australia's potential pivot to rate hikes as a bullish factor, suggesting a nuanced approach towards US dollar shorts while favoring exposure to the Australian dollar.