ATFX Global Forex Market: During this round of dollar appreciation, the Canadian dollar has performed the strongest

atfxCurrency market: In May, the US dollar index rose by 2.52%, the highest price hit 104.7, and the current price is 104.46, which is still at a short-term high. With the appreciation of the US dollar, non-US currencies have collectively depreciated. In May, the euro depreciated by 2.99%, the yen depreciated by 2.22%, the British pound depreciated by 1%, the Australian dollar depreciated by 1.69%, the Swiss franc depreciated by 1.81%, the New Zealand dollar depreciated by 2.6%, the Korean won depreciated by 1.27%, the Indonesian rupee depreciated by 2.15%, the Canadian dollar depreciated by 0.18%, the Thai baht depreciated by 1.48%, and the Singapore dollar depreciated by 1.25%. Among the top ten mainstream currencies, the smallest depreciation was the Canadian dollar, and the largest depreciation was the euro. The difference between the depreciation of the two was as high as 2.81%, which was

Why has the euro depreciated so much? The impact of the Russian-Ukrainian conflict cannot be ignored. At the beginning of this year, financial marekt had optimistic expectations that the Russian-Ukrainian conflict would end in the first quarter. Now, the optimistic expectations have failed, and the Russian-Ukrainian conflict has not ended, but has also intensified. The situation in Serbia and Kosovo has also begun to become tense, which has a significant impact on the confidence of European investors. In contrast, in the United States, high inflation is easing, unemployment is at a historic bottom range, and the Federal Reserve is about to suspend its aggressive interest rate hike policy in June. Everything is going in the right direction. Therefore, the outflow of funds from European financial marekt to Wall Street in the United States has become a natural choice. It should be reminded that the issue of the White House debt ceiling has not been properly resolved, which is a latent risk hanging over the US economy and the dollar index.

Why has the Canadian dollar depreciated so little? The relatively strong oil price may be the main factor. In May, the international crude oil price fell by 12%, which looks very large, but the WTI price is still around 70 US dollars. 98% of Canada's crude oil reserves are in the form of oil sands, which are difficult to extract, and the cost of extracting a barrel of oil is about 30 US dollars. The level of international oil prices at 70 US dollars can provide a boost to Canada's macro economy. In March this year, the Bank of Canada announced the suspension of interest rate hikes, ending the tight monetary policy that has been maintained for more than a year. The governor of the Bank of Canada, McCrum, said in a speech: "We have suspended interest rate hikes, but it does not mean that this round of interest rate hikes is over." Countries that are the first to stop interest rate hikes will tend to depreciate their currencies. However, since March, the Canadian 10-year bond yield has been gradually rising, indicating that financial marekts are still strongly anticipating the liquidity shortage of the Canadian dollar. In conclusion, the depreciation of the Canadian dollar is the smallest among the ten major currencies, which is reasonable.

ATFX Risk Alert, Disclaimer, Special Statement: The market is risky and investment needs to be cautious. The above content represents the personal views of analysts only and does not constitute any operational advice. Please do not consider this report as the only reference. Analysts' views may change at different times, and updates will not be notified.