Jan Størup Nielsen, Research Analyst at Nordea Markets, suggests that despite a further weakening of the krone the Danish central bank has not started to intervene yet and will likely change this month as they expect more weakening pressure on DKK.
Key Quotes
“At the same time the market is starting to price in a Danish rate hike.”
“In November the DKK weakened further against the euro, and EUR/DKK was trading above 7.463 several times. Despite this, the Danish central bank did not intervene in the FX market. This marked the 20th straight month without intervention – the longest period since the advent of the euro.”
“Over the last six weeks we have seen that the short end of Denmark has increased relative to EUR. In our view this shows that the market has adopted the view that an idiosyncratic Danish rate hike has become more likely.”
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