CAD/CLP Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and near the lower end of its three-month range.
Key drivers:
• Rate gap: The Bank of Canada's cautious stance contrasts with the Central Bank of Chile's recent rate cuts, affecting the CAD negatively.
• Risk/commodities: Oil prices are currently rising but are at seven-day lows, having a mixed impact on the CAD since it remains below its average.
• Global trade dynamics: Ongoing tensions, especially U.S. tariffs, create uncertainty that can affect both the CAD and CLP, with varying degrees of impact on their economies.
Range:
Expect the CAD/CLP to test its recent lows, while showing limited movement overall.
What could change it:
• Upside risk: A significant rise in oil prices could strengthen the CAD against the CLP.
• Downside risk: Increased political volatility in Chile could further weaken the peso and complicate trade relations.
