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23 Oct 2015
ECB’s impact on Scandies – Danske Bank
FXStreet (Edinburgh) - Pernille Henneberg, Senior Analyst at Danske Bank, assessed the implications for the Scandies of the renewed dovish tone by the ECB.
Key Quotes
“The ECB’s signals and the sharp sell-off in the EUR also triggered mild selling in EUR/Scandies”.
“However, it is important to keep in mind that the ECB’s expected changes in monetary policy will have a profound impact on the monetary policy in Scandinavia”.
“First, we expect that DN will keep its policy rates unchanged over the coming 12 months – hence, the policy rate stays at -75bp. If additional easing by the ECB triggers downward pressure on EUR/DKK, we expect DN to cap EUR/DKK around 7.4500 using FX intervention”.
“Meanwhile, we expect the Riksbank to expand its current QE at the policy meeting on 28 October. This will cap any downside in EUR/SEK ahead of the policy meeting”.
Key Quotes
“The ECB’s signals and the sharp sell-off in the EUR also triggered mild selling in EUR/Scandies”.
“However, it is important to keep in mind that the ECB’s expected changes in monetary policy will have a profound impact on the monetary policy in Scandinavia”.
“First, we expect that DN will keep its policy rates unchanged over the coming 12 months – hence, the policy rate stays at -75bp. If additional easing by the ECB triggers downward pressure on EUR/DKK, we expect DN to cap EUR/DKK around 7.4500 using FX intervention”.
“Meanwhile, we expect the Riksbank to expand its current QE at the policy meeting on 28 October. This will cap any downside in EUR/SEK ahead of the policy meeting”.