Trade: Short USDCLP – Take profits at USDCLP 965 after hitting protective stop; re-enter reference: 965; Target: 900; New Stop: 1002
Trade revision: On August 14 USDCLP hit our profit protecting stop (c.1.2%), correcting higher after the CLP being the best performing currency since the short USDCLP recommendation inception on 6 August (see original note here). While the technical reversion on the back of US PPI and new Fed recalibrations was more aggressive than anticipated, we still like the trade for the same reasons (value, potential political shift towards orthodoxy bringing investments into Chile, some delay in next cuts and commodity mix support). Thus we re-enter the trade adjusting the parameters. We will continue to actively manage the position. Risks to the trade remain risk aversion, weaker copper and upswings in political noise closer to elections, which we still intend to potentially use to add to the recommended position.