CAD/CLP Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and lacks a clear driver for movement.
Key drivers:
- Rate gap: The Bank of Canada's recent rate cut contrasts with Chile's lower interest rate, which supported the Chilean Peso.
- Risk/commodities: Rising oil prices have previously benefited the Canadian dollar, but current volatility has left the loonie under pressure due to trade issues.
- One macro factor: Chile's recent inflation drop and the political shift with a new president have contributed to a more favorable outlook for the peso.
Range: Expect the pair to hold within its recent range, facing challenges to break out significantly in either direction.
What could change it:
- Upside risk: A surprise announcement from the Bank of Canada signaling a potential shift in monetary policy could boost the CAD.
- Downside risk: Further deterioration in U.S.-Canada trade relations may negatively impact the CAD's performance.