USD/CLP Outlook:
The USD/CLP is likely to increase as it trades above its recent average and is near recent highs. Current events in the Middle East are driving significant demand for the US dollar as a safe haven.
Key drivers:
• Rate gap: The US Federal Reserve's rate policies contrast with the Chilean Central Bank’s decision to maintain rates, supporting stronger USD demand.
• Risk/commodities: Oil prices surged amid ongoing Middle East tensions, increasing global demand for USD, as oil is priced in dollars.
• One macro factor: The projected inflation decline in Chile, aiming for a 3% target, may keep the CLP under pressure amid rising geopolitical risks.
Range:
Expect the USD/CLP to hold near current levels within its 3-month range, having traded quite volatile recently.
What could change it:
• Upside risk: A significant escalation in Middle East conflicts could heighten USD demand further.
• Downside risk: A strong positive economic report from Chile may bolster the CLP against the USD.
