Bias: Bearish-to-range-bound, as CAD/CLP trades below its 90-day average and sits in the lower half of the recent 3-month range, reflecting ongoing external headwinds and domestic data risk.
Key drivers:
- Rate gap: The Bank of Canada policy rate remains well below Chile's central bank rate, widening the yield gap in favor of CLP and shaping carry conditions for traders.
- Risk/commodities: Oil is above its 3-month average with notable swings, a factor that tends to support CAD when prices rise, though volatility keeps risk premiums elevated.
- Macro factor: Copper prices have surged, underpinning Chile's export earnings and the peso, with implications for fiscal space and policy expectations.
Range: CAD/CLP is expected to drift within the 3-month range, with a mild test of the lower bound if oil or copper moves.
What could change it:
- Upside risk: Oil continues to rise, providing modest CAD support.
- Downside risk: Chilean peso strengthens further on copper-price gains and reform optimism, pushing CAD/CLP lower.
