The CAD to DKK exchange rate is currently range-bound, hovering near 90-day highs.
Key drivers include:
- Interest Rate Differential: The Bank of Canada holds rates at 2.25%, while Denmark's central bank maintains a lower rate to support the krone's peg to the euro, influencing capital flows towards the CAD.
- Economic Indicators: A strong Canadian jobs report improved confidence in a potential CAD strengthening, while Denmark projects stable inflation and lower wage growth, providing stability for the DKK.
The near-term trading range is likely to remain stable given recent fluctuations, with the CAD trading in a narrow band around its average.
An upside risk could arise from a rebound in oil prices benefiting the CAD, while a downside risk may stem from any unexpected rate cuts from the Bank of Canada or further deterioration in global sentiment affecting both currencies.