Peso Weakens as Chilean Stocks Pause After Rally

Reuters reports that investors opened September 25 weighing rising copper output against a firm U.S. dollar. The peso edged to 952.14 per dollar as the U.S. Dollar Index held near 97.8, driven by Federal Reserve reluctance to cut rates immediately.

Traders cited comments from Fed officials warning that inflation remains too high for premature easing. On the Santiago Exchange, the S&P IPSA slipped 0.35 percent to 9,114.79 after reaching a two-month high.

Copper miners led gains amid optimism over Codelco’s ramp-up plan. Falabella topped the index, rising 3.9 percent, followed by BCI at 3.6 percent, Banco de Chile at 2.8 percent, Santander Chile at 2.1 percent and Copec at 1.8 percent.

In contrast, telecoms fell 1.8 percent, energy names dropped 1.3 percent, healthcare lost 1.1 percent, real estate slipped 0.6 percent and industrials declined 0.2 percent.

Traders cited a cautious tone in local news that Finance Minister Mario Desbordes plans a 2 percent spending increase next year. He stressed fiscal discipline while supporting social programs.

That balance kept long-term yields stable but dampened appetite for cyclicals outside mining. The peso’s slide reflected global dollar strength. U.S. new home sales jumped 20.5 percent in August, reinforcing bets on a steady Fed.

Investors noted that robust U.S. data offsets local strengths. They expect domestic data on retail sales later this week to influence market direction.

Technically, both IPSA and USDCLP charts indicate consolidation. The four-hour IPSA MACD histogram contracted, and RSI retreated from overbought levels.

On the daily chart, the index sits above its 50- and 200-day moving averages, but narrowing Bollinger Bands signal low volatility. Similarly, USDCLP trades above its key moving averages but shows flattened momentum.

ETF flows offered mixed signals. Emerging-market equity ETFs saw $2.2 billion of inflows last week, while global equity funds recorded outflows as investors took profits after recent rallies.

Latin America funds benefited from carry advantages, despite the stronger dollar. Analysts say markets need fresh catalysts. A clear fiscal plan or a surprise in U.S. inflation data could break the current range.

Until then, traders expect modest swings around current levels. Investors will watch August retail sales and next U.S. PMI readings for directional clues.