Chile: Dollar closes at two-week highs following strong US figures and middle-east tensions.

US Treasury yields surged by up to 10 basis points, and the Chilean peso was the third-worst performing emerging market currency of the day.

On Monday, the dollar rose to $980 as retail sales in the United States increased more than expected, challenging expectations of monetary easing. Meanwhile, Iran’s attack on Israel over the weekend contributed to investor risk aversion.

The local exchange rate jumped by $8.45 to $979.55 – marking two-week highs – at the close of the market session, making the Chilean peso the third-worst performing currency of the day among emerging markets. In parallel, the dollar index rose by 0.15% to a new high since November, while Treasury bond yields surged by up to 10 basis points (bp).

In general, external geopolitical concerns add volatility to international markets, which will have a more amplified effect on the Chilean peso.

Brent crude oil recovered to $90 per barrel, erasing its initial decline of the day, while gold rose by 1.76% to new historical highs. Investors are watching for potential Israeli retaliation against Iran for the attacks carried out on Saturday, which were largely repelled.

Another factor is US consumption. The solid retail sales figures follow those of inflation and nonfarm payrolls, both of which were above expectations. These are clear indications that the US economy continues to perform well, which could lead the Federal Reserve to postpone interest rate cuts for a longer period.

The exchange rate rose despite the Comex copper rebounding by 2.54% to $4.37 per pound, its highest price in nearly two years. This is mainly in response to supply constraints, driven by new prohibitions from the US and the UK, preventing Russian commodities from trading on the London Stock Exchange and CME, thus avoiding acceptance of new production from Russia.