EUR/DKK could test 7.4450 in 12-month – Danske Bank
Senior Analyst at Danske Bank Jens Pedersen expects EUR/DKK to inch higher to the 7.4450 area within a year’s view.
“We expect DN to keep the rate of interest on certificates of deposit (CD rate) unchanged at -0.65% in 12M. Should the ECB lift its deposit rate over the next year (not our main scenario), we would expect DN to increase the CD rate correspondingly, as we expect DN to value a less negative policy rate more highly than a higher EUR/DKK spot”.
“The Danish current account surplus rebounded in September offsetting the decline seen of the prior months. The lower USD/DKK could weigh on the surplus over the coming year. That said, DKK remains well supported by strong external fundamentals”.
“We expect EUR/DKK to trade around 7.4425 on 1-6M. Next year, we look for some positive spill over from a higher EUR/USD and forecast the pair at 7.4450 on 12M. Following the uncertain outcome of recent political events in Europe, e.g. the German election and Catalan referendum, focus may turn to the Italian election due to be held in May next year at the latest”.