13 Feb 2015
EUR/DKK peg hinges on further DN intervention – Danske Bank
FXStreet (Edinburgh) - Lars Christensen, Chief Analyst at Danske Bank, believes the DN preferring to intervene in the markets than acting on the rates.
Key Quotes
“The market was looking for another unilateral Danish rate cut yesterday at 16:00 CET, but Danmarks Nationalbank (DN) did not deliver”.
“Therefore the very short end of the curve corrected some 10-15bp”.
“The fact that DN did not cut yesterday indicates to us that FX intervention will be the preferred strategy going forward”.
“Although further rate cuts cannot be ruled out, we project unchanged rates for the near future”.
“If the pressure on the DKK continues, DN could opt for FX swaps or buying Danish bonds. However, in our view, the best strategy would be to just intervene in the FX markets”.
Key Quotes
“The market was looking for another unilateral Danish rate cut yesterday at 16:00 CET, but Danmarks Nationalbank (DN) did not deliver”.
“Therefore the very short end of the curve corrected some 10-15bp”.
“The fact that DN did not cut yesterday indicates to us that FX intervention will be the preferred strategy going forward”.
“Although further rate cuts cannot be ruled out, we project unchanged rates for the near future”.
“If the pressure on the DKK continues, DN could opt for FX swaps or buying Danish bonds. However, in our view, the best strategy would be to just intervene in the FX markets”.