CAD/CLP Outlook:
The CAD/CLP is likely to increase as it trades above its recent average and near recent highs. This is primarily supported by robust oil prices, benefiting the Canadian dollar.
Key drivers:
• Rate gap: The Bank of Canada is expected to maintain a more hawkish stance compared to the Central Bank of Chile, which recently kept rates steady at a lower level.
• Risk/commodities: Oil prices have surged, remaining significantly above their recent average, strengthening the CAD due to Canada’s status as a major oil exporter.
• One macro factor: Chile's improving inflation outlook may provide some support for the CLP, but its impact seems limited against CAD strength.
Range:
Expect the CAD/CLP to hold near current levels but may test the upper end of its recent range due to ongoing oil price support.
What could change it:
• Upside risk: A further increase in oil prices could lead to stronger CAD performance.
• Downside risk: A decline in global risk appetite could pressure the CAD and support the CLP.