Bias: bearish-to-range-bound, with CAD/CLP trading clearly below its 90-day average and tucked into the lower half of the three-month range.
Key drivers:
- Rate gap: Chile’s policy rate remains meaningfully higher than Canada's, even after the BoC cut, giving CLP a yield edge and shaping rate expectations in the pair.
- Risk/commodities: Oil has moved to 30-day highs, signaling stronger demand and volatility, which tends to support CAD as a major export currency and can offset CLP pressure.
- Macro factor: Kast’s victory and reform plans have boosted peso prospects, shaping Chile’s policy outlook and supporting a more favorable climate for CLP.
Range: CAD/CLP is likely to drift within its three-month range, with occasional tests of the lower end near the recent floor, as volatility persists.
What could change it:
Upside risk: oil continues to rally, lifting the CAD/CLP pair.
Downside risk: renewed risk-off mood or softer copper demand could push CLP lower and widen the spread with CAD.