CAD/CLP Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and lacks a strong driver for movement.
Key drivers:
• Rate gap: The Bank of Canada's recent rate cut contrasts with the Central Bank of Chile's recent easing, making the CAD less attractive compared to the CLP.
• Risk/commodities: Oil prices have recently risen, but they remain below average levels, which may limit the CAD's strength as the currency is closely tied to oil export revenues.
• One macro factor: Chile's falling inflation rates have prompted a positive shift in the Central Bank's outlook, supporting the peso's value.
Range: The CAD/CLP is likely to drift within its recent range, as current factors do not provide strong impetus for change.
What could change it:
• Upside risk: A significant rise in oil prices could bolster the CAD and lead to a stronger performance against the CLP.
• Downside risk: Further deterioration in Canadian trade due to U.S. tariffs could weigh down on the CAD, increasing pressure on the exchange rate.
