ECB's dovish statement yesterday added to the downward pressure on EUR/DKK, which dropped below 7.4400 for the first time since 2012.
It thus increases the pressure on Danmarks National Bank (DN) to react. We expect DN to make additional FX intervention purchases and cut the CD rate by 10bp to minus 0.15% before year-end.
If the ECB reaches its balance sheet target, it would probably require an increase in DKK liquidity of DKK70bn - thus further DN easing to cap EUR/DKK downside.
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