The dollar index closed at 114.16 on September 27, reaching a 20-year high level. In the face of the strong dollar, commodity prices have fallen since June, with a significant decline since September. Commodity currencies have also weakened significantly this year.


  Analysts believe that the current multiple factors favoring the dollar, in the dollar to maintain the strong expectations, short-term commodities and commodity currencies weak market or continue, but in the long term, the current decline or bring low-cost buying opportunities for investors.


  Commodities competing "bend"


  Since this year, with the Fed's continued advancement of interest rate hikes, the cost of financing the U.S. dollar has risen, with the U.S. dollar-denominated crude oil, non-ferrous metals and other commodities under significant pressure.

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  Commodity prices have accelerated back down since September. Data show that by the close of business on September 27, the CRB Commodity Index, which represents the trend of international commodity prices, has fallen by 8.42% since September. From the performance of leading varieties, as of September 27, international crude oil, gold and copper futures prices have fallen by about 37%, 13% and 26%, respectively, since their mid-June highs.


  "Commodity prices continue to fall, on the one hand, from the pressure of the strong U.S. dollar, the dollar index has risen more than 18% since the beginning of the year, international commodity prices are generally under pressure; on the other hand, the world's major countries continue to fall in economic growth, fueled by strong central bank interest rate hikes, the risk of the economy falling into recession is increasing day by day, the demand for commodities weakened. " Xu Ying, senior analyst of foreign exchange/precious metals at Dongzhi Futures, told China Securities Journal.


  The chief economist of Melia Futures, Yuan Tao, told China Securities Journal that recently, the risk premium of energy commodities gradually returned to rationality, which further drove the CRB commodity index downward.


  In the commodities have "folded" when the dollar will be "long temperament" pinch dead. "The recent sustained rise in the dollar index is supported by multiple factors." Founder mid-term futures macro and precious metals senior analyst Shi Jialiang analysis to China Securities Journal reporter said, European PMI and other economic data performance is weak, the U.S. economic data performance is stronger, the impact of the energy crisis, the European recession earlier, deeper, the British tens of billions of pounds tax cut plan directly negative pound, the euro, pound weak are favorable to the dollar index.


  Commodity prices have fallen further dragging commodity currencies. Since the beginning of the year, the Canadian dollar against the U.S. dollar, the Australian dollar against the U.S. dollar, the New Zealand dollar against the U.S. dollar depreciated by about 8%, 11%, 17%, respectively. "The weakness in commodity currencies is behind the retreat in prices of major export commodities. For example, so far, crude oil prices have fallen by about 30% cumulatively from their March highs, iron ore prices have fallen by about 25% cumulatively from their April highs, and New Zealand's exports of lamb, dairy products and wool are also affected by overall global demand, with the risk of further weakening demand in the future." Xu Ying said.


  Or a good long-term buying opportunity

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  Looking ahead, analysts believe that the performance of short-term commodities and commodity currencies is hardly optimistic under the expectation that the U.S. dollar will remain strong, but in the long run, the current may be a good opportunity to buy before the expected future recovery heats up.


  "The Federal Reserve accelerated the tightening of monetary policy, the comparative advantages of the U.S. and European economies still exist, the European economy earlier and deeper recession is expected to drag the euro, the geopolitical situation is still tense, the dollar index is expected to continue the strong market. U.S. stocks and commodities will maintain a weak market, short-term rebound does not change the overall weak pattern." Shi Jialiang said.


  "In the Federal Reserve policy before the obvious turn, commodity prices remain under pressure, commodity currencies are difficult to say rise, need to wait for the United States own economic downturn led to market expectations of the end of the monetary policy tightening cycle, the strong dollar on the overall pressure on non-US currencies weakened, commodity currencies will only usher in the opportunity to rebound. At the moment it is appropriate to wait and see and minimize exposure." Xu Ying said that at the end of the strong dollar, the precious metals sector will be the first to bottom out, and relatively speaking, the gold market is now more certain.


  According to Yuan Tao, in the short term, the pullback in commodity prices and the depreciation of the Canadian dollar, Australian dollar and New Zealand dollar have formed a rotation effect. The underlying basis of this rotational effect lies in the global short-term demand slump and the Fed rate hike, which should continue to hold. The short-term downside move in commodities may present low-cost buying opportunities.