USD/CLP Outlook: Bearish, as the rate is below its recent average and near recent lows amid geopolitical tensions. Key drivers:
• Rate gap: The Federal Reserve's pause on rate cuts contrasts with Chile’s steady interest rate, supporting a stronger CLP.
• Risk/commodities: The current downtrend in oil prices has led to a cautious stance, impacting the USD negatively as global demand edges lower.
• One macro factor: Chile's improved inflation outlook, with a projection to meet the 3% target sooner, supports the CLP.
Range: Expect USD/CLP to hold within its recent 3-month range, reflecting ongoing volatility but limited upside potential for the US dollar.
What could change it:
• Upside risk: A sudden rebound in US economic indicators, such as a stronger-than-expected ISM manufacturing PMI, could support the USD.
• Downside risk: Escalating geopolitical tensions could further hurt the USD as investors seek safe-haven currencies.