Bias: Bearish-to-range-bound, as the CAD is below its 90-day average and within the lower half of the 3-month range.
Key drivers:
- Rate gap: The Bank of Canada recently cut interest rates, while the Central Bank of Chile is lowering rates to support growth, narrowing the yield differential and impacting CAD attractiveness.
- Risk/commodities: Oil prices are currently above average, which could help support the CAD due to Canada's heavy reliance on oil exports.
- Macro factor: Political changes in Chile following the recent presidential election have led to optimism, bolstering the peso's standing.
Range: The CAD/CLP pair is likely to drift within its recent range due to mixed economic signals from both countries.
What could change it:
- Upside risk: A significant rebound in oil prices could provide strength to the CAD.
- Downside risk: Continued rises in Canadian unemployment or negative economic data could pressure the CAD lower against the peso.