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Jan 07 - 10:55 AM

USD: Dollar Short Squeeze Is Here As Short USD Holders Are Feeling A 'Bit Seasick' - SocGen

By eFXdata  —  Jan 07 - 09:30 AM
Societe Generale flags a scope for the recent USD squeeze to extend further in the near-term.
 
"The tide of valuation is still dragging the dollar lower as it remains expensive relative to rates, but the prevailing wind, in the form of the direction those rates are moving, is going the other way. When the wind and tide go in opposite directions, the sea gets choppy - sometimes very choppy. With the added chaos caused by US politics, we can imagine that some of the holders of short dollar trades are feeling a bit seasick," SocGen notes. 

"Hopefully, US politics enters calmer waters once we get to Inauguration, if not before. We may then rethink just how liberal and fiscally lax a Biden Presidency can be with a tiny majority, Blue Wave or not. If we've cleared out some positions, maybe we will have set the stage for a calmer run to a weaker dollar, but there might be two weeks of the current trends to navigate first," SocGen adds. 

 

Source:
Société Générale Research/Market Commentary

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