USD/CLP Outlook: Bearish, as the rate is below its recent average and near recent lows, pressured by tariff concerns and geopolitical tensions.
Key drivers:
• Rate gap: The Federal Reserve is expected to ease rates, while the Central Bank of Chile has recently cut rates, supporting the peso.
• Risk/commodities: Rising copper prices bolster the Chilean peso by enhancing export revenues, impacting its competitiveness against the US dollar.
• One macro factor: Political developments following Chile’s presidential election have increased market optimism around economic reforms, supporting the peso further.
Range: The USD/CLP pair is likely to drift within its recent range as it is currently below average and considers various factors impacting both currencies.
What could change it:
• Upside risk: Renewed demand for the US dollar due to volatility related to tariffs and geopolitical tensions could lead to a shift.
• Downside risk: Continued strength in copper prices coupled with improvements in Chile's economic outlook may further weaken the USD against the CLP.
