EUR/DKK to trade at 7.44 in 1-12M - Danske Bank

According to analysts from Danske Bank, the EUR/DKK will trade at 7.4400 during the next 12 months. They point out that the Danish central bank made no intervention in the FX market in July. 

Key Quotes: 

“The Danish FX reserve fell by DKK0.05bn to DKK463.9bn in July. The decline reflects Danmarks Nationalbank’s (DN) net purchase of foreign exchange and net repayments of the government's foreign debt. The DN did not intervene in the FX market and this is the fourth consecutive month of no direct intervention in the FX market from DN’s side.”

“EUR/DKK been relatively stable trading within the 7.4350-7.4390 range in July and thus with some distance to the level of 7.4330 where DN was buying EUR/DKK in FX intervention in February and March this year. It underscores that calm has been restored for EUR/DKK following the need to sell DKK in FX intervention in February and March.”

“While the EUR has rallied around 5% in effective terms since the middle of April, it has failed to outperform DKK over this period. The lack of EUR outperformance vis-à-vis the DKK can, in our view, be explained by the market pricing DN to mirror a potential rate hike from the ECB next year, which is fair in our view, and strong DKK fundamentals.”

“We forecast EUR/DKK will trade at 7.4400 in 1-12M. Furthermore, we look for DN to keep its key policy rate, the rate of interest on certificates of deposits, unchanged at minus 0.65% in 12M.”