Oil-To-Copper Implies Further CLP Depreciation

Having repeatedly failed to punch through multi-month trendline resistance in Q210, our near-term outlook on the Chilean peso is decidedly bearish. That the unit has remained firmly within its depreciatory trend channel over the past several weeks amidst a period of dollar weakness is certainly cause for concern, and we cannot rule out further losses towards the CLP550.00/US$ area accordingly. To be sure, despite the peso's weak short-term outlook, we note that a firm push above trendline resistance at CLP539.00/US$ would be regarded as a bullish signal, and potentially presage a more fundamental reversal of the currency's recent declines. At the same time, it is important to note that trading at CLP662.55/EUR at one point on June 29, the currency remains within its appreciatory trendchannel against the euro, and looks set to post further gains towards CLP640.00/EUR in the first instance.

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