Flash Comment Denmark: Weaker DKK in November, but no FX intervention

Danske Research Team Danske Bank A/S

The Danish FX reserve was roughly unchanged at DKK467bn in November.

EUR/DKK continued to trade above 7.46038 through most of the month, but it did not prompt FX intervention.

We forecast EUR/DKK at 7.4550 on 6-12M and the key policy rate to stay unchanged at minus 0.65% on 12M.

Danmarks Nationalbank (DN) has just published November's FX reserve data and central bank balance sheet. The FX reserve was roughly unchanged at DKK467bn as DN refrained from making FX intervention (see chart 1). Government deposits were DKK128bn down from DKK157bn in October.

EUR/DKK traded above the 7.46038 central rate through most of November and at a slightly higher level than the high from October (see chart 2). Nevertheless, DN remained on the sidelines. DN has not intervened in the FX market since March 2017, a run of twenty months.

Looking ahead, we expect EUR/DKK to make its way back below the central rate again on its own and forecast it around 7.4550 on 6-12M. Furthermore, we expect DN to keep the key policy rate unchanged at minus 0.65% on 12M.

Government deposits declined DKK29bn in November (see chart 3). That is mainly owing to the large redemption on DGB'18, which took place in November. The government plans to draw down its deposits by DKK55bn over the coming year to cover part of its financing need. A further decline in government deposits will increase banks' net position correspondingly.

Author

Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

EUR/USD consolidates around 1.0900, bullish bias remains ahead of key US data

The EUR/USD pair is seen consolidating its strong gains registered over the past two days and oscillating in a narrow band during the Asian session on Tuesday. Spot prices currently trade around the 1.1900 mark, just below an over one-week high touched the previous day.

GBP/USD edges lower below 1.3700 on UK political risks, BoE rate cut bets

The GBP/USD pair trades on a weaker note around 1.3685 during the European session on Tuesday. The Pound Sterling edges lower against the US Dollar amid political risk in the United Kingdom and rising expectations of near-term Bank of England rate cuts.

Gold: Will US Retail Sales data propel it above $5,100?

Gold hovers below weekly highs of $5,087 early Tuesday, await US Retail Sales data. The US Dollar enters a downside consolidation phase amid persistent Japanese Yen strength and worsening labor market. Gold settled Monday above $5,000, now looks to take out $5,100 amid bullish daily RSI.

Top Crypto Gainers: World Liberty Financial, MemeCore and Quant gain momentum

World Liberty Financial, MemeCore, and Quant are leading gains over the last 24 hours as the broader cryptocurrency market stabilizes after last week’s correction. Still, the technical outlook for altcoins remains mixed due to prevailing downside pressure and vulnerable market sentiment.

Follow the money, what USD/JPY in Tokyo is really telling you

Over the past two Tokyo sessions, this has not been a rate story. Not even close. Interest rate differentials have been spectators, not drivers. What has moved USD/JPY in local hours has been flow and flow alone.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.