Description

We examine how the public commodity-news environment shapes connectedness between the Chilean USD/CLP spot market and international copper futures. Given Chile’s position as the world’s leading copper exporter, USD/CLP is widely regarded as a commodity currency. Using proprietary transactionlevel USD/CLP data from the Central Bank of Chile, high-frequency COMEX copper futures data, and Bloomberg news coverage summarized into daily factors, we show that calmer commodity-news regimes are associated with a stronger FX–copper link, with the informative order Flow of end-users serving as a key driver of this relationship. Specifically, we find that a oneunit increase in our news-tranquility measure is associated with 5% and 3% standarddeviation increases in our TVP-VAR connectedness measure and correlation-based connectedness measure, respectively. Furthermore, local informed-trading measures rise by 17 to 18 percentage points per unit of imbalance in international copper futures order flow when endusers are selling USD in the local market.