Danske Bank's research team reports that the Norwegian Krone (NOK) appreciated throughout the day, supported by risk-on sentiment, resulting in the EUR/NOK exchange rate returning to levels just above 11.00 [1]. In contrast, the Swedish Krona (SEK) initially resisted the positive risk environment during the European session, potentially due to repatriation flows, but later followed the broader market trend in the US and Asian sessions, with EUR/SEK slipping below 10.80 [1].
The report highlights that in Sweden, market participants are focusing on the release of SPES monthly labour market statistics and a speech by Riksbank's Per Jansson, scheduled for 13:15 CET, which will address current monetary policy and the economy. Danske Bank expects Jansson to maintain a relatively dovish stance, consistent with the minutes from the last meeting, especially as inflation has recently surprised on the downside and inflation expectations remain well anchored [1].
In Denmark, the EUR/DKK spot rate briefly touched 7.4732, a level that previously prompted intervention by Danmarks Nationalbank, bringing renewed attention to the upper end of the currency peg to the euro [1]. While markets are currently pricing in roughly a 50% probability of a 10 basis point independent rate hike by Danmarks Nationalbank this year, Danske Bank believes that liquidity developments are more likely to ease pressure on the Danish Krone, reducing the likelihood of such a move [1].
CONCLUSION
Scandinavian currencies showed divergent reactions to risk sentiment, with the NOK strengthening and the SEK initially lagging before following suit. Market focus in Sweden and Denmark remains on upcoming economic data, central bank commentary, and the potential for policy action, though Danske Bank expects easing pressures to reduce the likelihood of a Danish rate hike.