20 Jan 2015
Danish peg indisputable – Danske Bank
FXStreet (Edinburgh) - Following the SNB move last week and the recent decision of the Danish central bank to lower its deposits rate, Christin Tuxen, Senior Analyst at Danske Bank, ruled out any change in the current peg.
Key Quotes
“In the aftermath of last week’s SNB move and ahead of a likely QE announcement from the ECB later this week, a lot of focus has turned to EUR/DKK”.
“The Danish central bank surprised the market yesterday and lowered both the deposit rate and the lending rate by 15bp to -0.20% and +0.05%, respectively”.
“In our view, this suggests that Nationalbanken has seen a significant inflow since the SNB exit”.
“We doubt that the rate cut is big enough to stave off inflows into Denmark - not least as we expect a EUR750bn QE programme from the ECB”.
“Thus, we expect that Nationalbanken will be forced to continue intervening in the FX market in the near term”.
“As a result, we now look for another rate cut of 10bp in the near future in Denmark. We stress, however, that the Danish peg is indisputable and that the central bank still has ample room to manoeuvre”.
Key Quotes
“In the aftermath of last week’s SNB move and ahead of a likely QE announcement from the ECB later this week, a lot of focus has turned to EUR/DKK”.
“The Danish central bank surprised the market yesterday and lowered both the deposit rate and the lending rate by 15bp to -0.20% and +0.05%, respectively”.
“In our view, this suggests that Nationalbanken has seen a significant inflow since the SNB exit”.
“We doubt that the rate cut is big enough to stave off inflows into Denmark - not least as we expect a EUR750bn QE programme from the ECB”.
“Thus, we expect that Nationalbanken will be forced to continue intervening in the FX market in the near term”.
“As a result, we now look for another rate cut of 10bp in the near future in Denmark. We stress, however, that the Danish peg is indisputable and that the central bank still has ample room to manoeuvre”.