Santiago, Chile – The Chilean peso continued its ascent against the US dollar at the start of the week, driven by both global pressures on the dollar and strengthening domestic sentiment. The dollar closed at 853.2 Chilean pesos on Monday, , a level not seen since .
The decline reflects a broader weakening of the dollar internationally, spurred by developments in China and Japan, and occurring ahead of key US economic data releases on consumer spending, employment, and inflation. The dollar index fell 0.8% to 96.9 points, while the price of London-traded copper rose 1.6% to US$5.99 per pound. Initial gains in US long-term interest rates were erased during the trading session.
Dollar Faces Renewed Headwinds
According to Rodrigo Castillo, General Director of BeFX, “The fundamentals are returning and there is widespread optimism regarding the Chilean peso, although This proves encountering strong buying pressure at $850. We need to pay attention to this level, as we could see the execution of stop losses or simply a change in position, allowing the dollar to break through $850 and seek levels close to $830.”
The dollar’s recent recovery, following a period of four-year lows, appears to be facing significant obstacles. Ricardo Evangelista, Director of ActivTrades, noted that the dollar continues to suffer from investor diversification strategies, with funds moving away from the US currency. Expectations of at least two interest rate cuts in 2026 are also creating headwinds for the dollar. This dynamic is supporting gold prices, reflecting the inverse relationship between the two assets.
Key US economic data releases are scheduled for this week. December retail sales figures will be published on Tuesday, January’s delayed non-farm payrolls report on Wednesday, and the Consumer Price Index (CPI) report on Friday. These releases are expected to provide further insight into the health of the US economy and potentially influence the dollar’s trajectory.
China and Japan Contribute to Dollar Weakness
Adding to the downward pressure on the dollar, Chinese regulators have reportedly asked private banks in the country to reduce their exposure to US Treasury bonds, citing concerns about concentration risk. Simultaneously, the Japanese yen strengthened by 0.8% due to domestic factors, following the strong showing of Prime Minister Sanae Takaichi and her party in recent Japanese elections.
Shifts are also being observed in the US derivatives market. The Commodity Futures Trading Commission (CFTC) reported on Friday that non-commercial positions in currency futures reached their most aggressive level against the dollar since .
Matt Simpson, Market Analyst at City Index, observed, “Speculative positions in currency futures are continuing to move away from the dollar, and traders are accelerating their bearish bets while selectively increasing their exposure to the euro and Canadian dollar.” He cautioned, however, that a divergence exists between the actions of large speculators and asset managers, with the latter appearing more cautious and favoring consolidation over extending the trend. “That divergence increases the risk of pauses or pullbacks in the short term, especially as positioning has become massive.”
The Chilean peso’s strength is notable in the context of a generally weakening US dollar. The combination of global factors and positive domestic sentiment appears to be creating a favorable environment for the currency. However, analysts caution that the $850 level represents a key resistance point, and a break above this level could trigger a reversal of the recent trend.
The ongoing developments in the global currency markets underscore the interconnectedness of the world economy and the sensitivity of currencies to a wide range of factors, including economic data, political events, and regulatory changes. Investors will be closely monitoring the upcoming US economic releases and further developments in China and Japan to assess the potential impact on the dollar and other major currencies.
