The Copper & CLP Strategy is a macro-based currency trading approach that leverages the strong correlation between copper prices and the Chilean peso (CLP). Chile is the world’s largest exporter of copper, accounting for nearly 30% of global production, making the CLP one of the most commodity-sensitive emerging market currencies. This strategy aims to capitalise on copper’s cyclical trends, supply-demand shifts, and global industrial sentiment to forecast directional moves in USD/CLP or CLP-crosses.

It is particularly effective for swing and position traders who combine fundamental commodity cycles with technical setups.

Why Copper Drives the Chilean Peso

• Copper exports represent over 50% of Chile’s total export revenue
• Higher copper prices improve Chile’s current account balance and foreign reserves
• Rising copper demand often leads to peso appreciation due to capital inflows
• Falling copper prices trigger CLP weakness, especially during global growth slowdowns

USD/CLP tends to move inversely to copper:

• Copper up → CLP strengthens → USD/CLP down
• Copper down → CLP weakens → USD/CLP up

Strategy Objective

• Monitor copper price trends as a leading indicator of CLP strength or weakness
• Use technical confirmation to time swing trades in USD/CLP
• Incorporate global risk sentiment, China data, and Chilean central bank policy

Step-by-Step Strategy Execution

Step 1: Track Copper Market Trends

Key instruments:

• COMEX Copper Futures (HG)
• LME Copper Spot Price
• Chinese copper demand reports
• Chilean mining output and export stats

Fundamental drivers:

• Global industrial activity (PMIs, GDP)
• Chinese construction & manufacturing growth
• Supply shocks (e.g. labour strikes, mine disruptions in Chile)
• USD strength (copper is priced in USD)

Example: Copper prices break above $4.00/lb → bullish CLP outlook

Step 2: Correlate with Chilean Macroeconomics

Watch:

• Chile’s trade surplus/deficit data
• Inflation readings (as copper export prices affect import costs)
• Central Bank of Chile (BCCh) rate guidance
• Political stability and mining tax reform risk

Bullish CLP case:

• Copper prices rising
• Hawkish BCCh tone (rate hikes)
• Low political risk
  → Trade USD/CLP short or long CLP against weaker EM currencies

Step 3: Technical Trade Setup on USD/CLP

Chart USD/CLP on daily or 4H timeframe:

• Look for reversal candlesticks after copper rallies
• Identify breakouts or retests of support/resistance
• Apply indicators:
  • RSI divergence
  • MACD crossovers
  • 50/200 EMA dynamic zones

Example Setup:

• Copper rallies 10% over 2 weeks
• USD/CLP forms double top at 925
• Enter short USD/CLP on break of neckline at 910
• Target: 880; SL: 928

Step 4: Monitor Key Events and Catalysts

• Chinese stimulus or industrial data surprises
• US inflation or Fed policy (impacts global commodity flows)
• Mining supply disruptions (e.g. Chilean port strikes)
• BCCh monetary policy meetings
• Seasonal demand in copper (Q2–Q3 tends to be strong)

Step 5: Position Management & Exit

• Trail stops as copper maintains trend
• Scale out near prior CLP resistance zones (USD/CLP support)
• Exit on copper exhaustion signals or major macro reversals

Tip: Use copper ETF (e.g. CPER) or LME/COMEX live charts to monitor real-time momentum.

Trade Example: 2021 Copper Supercycle Surge

• Copper prices surged past $4.50/lb on China recovery and supply constraints
• Chile ran record trade surpluses
• USD/CLP dropped from 750 to 705 over 4 weeks
• Traders shorting USD/CLP with confirmation from copper trend captured high-probability multi-week moves

Advantages

• Clear macro correlation with high conviction
• Suitable for medium-term swing positioning
• Works well with technical + fundamental combo
• Chile has transparent economic data and a credible central bank

Limitations

• USD/CLP may be influenced by EM sentiment or USD risk-off flows
• Domestic political risk can temporarily override copper correlation
• Liquidity can be limited outside LATAM trading hours
• Regulatory or tax reform headlines may shock the peso

Risk Management Tips

• Avoid overexposure to CLP during major Chilean political events
• Use tight stops near copper price inflection zones
• Consider cross-hedging with EM ETFs or commodity baskets
• Stay updated on Chinese import behaviour (as China consumes over 50% of global copper)

Conclusion

The Copper & CLP Strategy offers a robust, macro-driven edge for currency traders. By combining copper price dynamics with Chile’s economic backdrop and clean technical setups in USD/CLP, this strategy enables traders to ride high-conviction trends with precision.

To deepen your understanding of commodity-linked FX strategies and global macro positioning, enrol in our Trading Courses and build the tools to trade the pulse of the world’s top resource-exporting currencies.