CLP: Looking Weak Beyond The Short Term

The Chilean peso depreciated by 13% against the US dollar in September, which unsurprisingly has sent short-term momentum indicators into well oversold territory. Yet while we see potential for a pull back towards the CLP500-510.00/US$ level, in line with a consolidation of copper prices, a move back to previous highs is very doubtful as eurozone sovereign debt woes keep investors wary of EM assets. Therefore, following near-term appreciation we expect the peso to remain on the back foot until we see a clear and decisive action by European policymakers, although expect Chile's robust macro outlook to see support hold around the CLP550-560.00/US$ range.

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