CAD/CLP Outlook:
The Canadian dollar (CAD) is likely to increase as it trades above its recent average and is at 30-day highs, supported by rising oil prices.
Key drivers:
• Rate gap: The Bank of Canada is likely more responsive to rising oil prices compared to the Central Bank of Chile’s rate holding.
• Risk/commodities: Oil prices are strong, impacting CAD positively as Canada is a major oil exporter.
• One macro factor: Political stability in Chile may strengthen the Chilean Peso (CLP) if recent wildfires and economic policies are effectively managed.
Range:
Expect CAD/CLP to hold within its recent 3-month range, showing strength but potential for limited upward movement.
What could change it:
• Upside risk: Continued increases in oil prices could further bolster the CAD.
• Downside risk: A sudden drop in oil prices or a geopolitical crisis may dampen CAD’s gains.