CAD/CLP Outlook:
The CAD/CLP pair is slightly weaker, but likely to move sideways as it trades below its recent average and is near the lower end of its 3-month range. Without strong current drivers, significant movement may be limited.
Key drivers:
- Rate gap: The Bank of Canada's recent interest rate cut contrasts with the Central Bank of Chile's steady rate, which creates pressure on the CAD against the CLP.
- Risk/commodities: Crude oil prices are currently above their average, but volatility in the oil market could impact the CAD negatively if prices fall, affecting Canadian revenues.
- One macro factor: Increased inflation in Chile surpassing estimates raises concerns about potential adjustments in monetary policy, which could influence the CLP's performance.
Range:
Expect CAD/CLP to hold steady within its recent range, as current market factors do not suggest a clear breakout.
What could change it:
- Upside risk: A significant rise in oil prices could strengthen CAD as it boosts Canadian export revenues.
- Downside risk: Further deterioration in Canadian trade relations with the U.S. could weigh heavily on the CAD.
