EUR: Diverging Scandies driven by risk flows – Danske Bank

Danske Research Team notes that the Norwegian Krone (NOK) strengthened on risk-on sentiment, pushing EUR/NOK back to just above 11.00, while EUR/SEK initially resisted positive risk before slipping below 10.80 later. Team also highlights that EUR/DKK briefly touched 7.4732, a level that previously triggered Danmarks Nationalbank intervention, refocusing attention on the upper end of the peg.

NOK up, SEK lags then follows risk

"In Scandies, the NOK rose throughout the day bolstered by risk-on. EUR/NOK has returned to levels just above 11.00. EUR/SEK defied positive risk sentiment throughout the European session, which could have been related to repatriation flows. In the US and Asian sessions, however, EUR/SEK followed the script and slipped below 10.80."

"In Sweden, focus is on SPES monthly labour market statistics and a speech by Riksbank's Per Jansson at 13:15 CET on current monetary policy and the economy. We expect a repeat of his relatively dovish stance as expressed in the minutes from the last meeting, not least as inflation has surprised on the downside and inflation expectations remain well anchored. "

"In Denmark, the EUR/DKK spot rate briefly reached 7.4732 yesterday, the level that previously triggered intervention by Danmarks Nationalbank, putting the upper end of the peg to the EUR back in focus."

"While markets currently price a roughly 50% probability of a 10bp independent rate hike by Danmarks Nationalbank this year, we believe it is more likely that liquidity developments will ease the pressure on the DKK."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)