CAD/DKK Outlook:
Slightly positive, but likely to move sideways, as the rate is near its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Bank of Canada is maintaining a cautious stance compared to Danmarks Nationalbank, which has recently cut rates to defend the krone's peg.
- Risk/commodities: With oil prices currently above their recent average, there is potential support for the CAD, yet recent softening may slow its momentum.
- Macro factor: Concerns about the stability of the DKK’s peg to the euro could influence its value significantly, especially if volatility increases.
Range:
The CAD/DKK is likely to hold within the recent range, showing little movement as the currencies stabilize.
What could change it:
- Upside risk: A surge in oil prices could lead to a stronger CAD, improving confidence in commodity-linked currencies.
- Downside risk: Continued weakness in oil prices could pressure the CAD, while increased concerns about the DKK’s peg could further dampen its performance.
