Where the Fed, the BoE, Riksbanken etc are cutting rates and doing massive QE, the Danish central bank is hiking rates and doing no QE, analysts at Nordea inform. EUR/DKK trades at 7.466.
“We believe that the large funding need required to fund all the coronavirus initiatives and compensate for the lack of taxes will force the central bank to do QE.”
“If the Danish central bank decides to launch a QE programme, it will increase the excess liquidity in Denmark as the newly printed DKK will enter the Danish economy as the government increases its spending.”
“All else equal, this will give rise to renewed upward pressure in EUR/DKK which again could trigger more intervention and possible also another independent interest rate hike by the central bank.”