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23 Feb 2015
EUR/DKK looking to stabilize between 7.4440-7.4700 – Danske Bank
FXStreet (Edinburgh) - In light of the unexpected spike to 7.4650 on Friday, analysts at Danske Bank expect the cross to find a consolidative range within 7.4440 and 7.4700.
Key Quotes
“EUR/DKK saw the largest day-to-day change on Friday since the introduction of the EUR in 1999, temporarily jumping back above the central rate of 7.46038”.
“The move follows four weeks of intense downward pressure on EUR/DKK, which has forced Danmarks Nationalbank (DN) to make unprecedented FX intervention purchases and cut the rate of interest on certificates of deposits (CD rate) to a record low minus 0.75%”.
“It is not clear what triggered the sharp move higher. It could be due to DN lifting its intervention target triggering short-covering, profit taking or a sell-off on concerns that capital controls may be imposed in Denmark to ease inflow following quotes on Reuters from Chairman of the Economic Council, Hans-Jørgen WhittaJacobsen, that DN could resort to such measure as a last resort”.
“The latter, in our view, should be regarded as unthinkable and thus not be a worry to the market. Despite the sharp move higher on Friday, we primarily remain concerned about EUR/DKK downside pressure and we expect DN to cap EUR/DKK in the range of 7.4440-7.4700 and do not expect changes to the CD rate on 12M”.
Key Quotes
“EUR/DKK saw the largest day-to-day change on Friday since the introduction of the EUR in 1999, temporarily jumping back above the central rate of 7.46038”.
“The move follows four weeks of intense downward pressure on EUR/DKK, which has forced Danmarks Nationalbank (DN) to make unprecedented FX intervention purchases and cut the rate of interest on certificates of deposits (CD rate) to a record low minus 0.75%”.
“It is not clear what triggered the sharp move higher. It could be due to DN lifting its intervention target triggering short-covering, profit taking or a sell-off on concerns that capital controls may be imposed in Denmark to ease inflow following quotes on Reuters from Chairman of the Economic Council, Hans-Jørgen WhittaJacobsen, that DN could resort to such measure as a last resort”.
“The latter, in our view, should be regarded as unthinkable and thus not be a worry to the market. Despite the sharp move higher on Friday, we primarily remain concerned about EUR/DKK downside pressure and we expect DN to cap EUR/DKK in the range of 7.4440-7.4700 and do not expect changes to the CD rate on 12M”.