We see downside risk to our 3-6M forecast for EUR/DKK at 7.4425 from the risk of tighter DKK liquidity in Q1 18 and event risk from the upcoming Italian election - two factors that have driven prior DKK rallies.
Danish pension funds with EUR assets who want to hedge this adverse scenario should use the recent uptick in EUR/DKK to hedge in shorter-dated FX forwards.
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