The Danish Krone got off to a fairly poor start to the week, losing over 0.5% against the Pound and allowing the GBP/DKK pairing to strike a high of 10.1640.
At the close of last week the Danish currency recorded its most significant decline against the Euro since 2001.
Demand for the Krone was seriously undermined after Hans Jorgen Whitta-Jacobsen, head of the Danish Economic Council, reportedly inferred that the nation’s central bank is prepared to defend its currency peg of 7.46 with the Euro at any cost.
The recent softening in the common currency, driven by mixed economic reports for the Eurozone, the introduction of quantitative easing by the European Central Bank and political uncertainty in Greece, have strained the EUR/DKK cap to breaking point.
However, Whitta-Jacobsen was quoted as saying that the Danish central bank will protect the peg by using ‘tools it has already used to an unimaginably higher degree’.
The Krone accordingly weakened to 7.4645 against the Euro on Friday, but recouped some of these losses on Monday amid concerns that the Eurogroup might take issue with some of the reforms proposed by Greece.
The Hellenic nation had to submit a list of workable proposals in order to be granted a four-month extension of its current bailout programme.
The Euro to Danish Krone (EUR/DKK) exchange rate was trading in the region of 7.4615 during the European session.
However, the Krone held declines against the Pound in spite of the Confederation of British Industry’s (CBI) reported sales figure plummeting in February.
The Danish Krone was also trending in a softer position against the US Dollar, with the USD/DKK currency pair achieving 6.6018.
Danish data is in short supply until towards the end of the week, but from Thursday onwards there are several reports with the potential to initiate Danish Krone movement.
The first notable release is the nation’s Business Confidence Index for February, due out at 08:00 GMT on Thursday. The gauge printed at -15 in January and economists are envisaging a slight improvement to -13.39 this month.
Denmark’s unemployment figure, also due out on Thursday, is projected to show the rate of joblessness holding at 4% at the beginning of 2015.
The week closes with the publication of preliminary fourth quarter growth figures. The Danish economy expanded at a rate of 0.3% in the third quarter, on a quarter-on-quarter basis.
However, the pace of growth is believed to have slowed to 0.21% in the final three months of last year. This would take the annual growth figure from the 1% recorded in the three months through September to 0.79% in the fourth quarter.
The direction taken by the Danish Krone over the course of the week may also be affected by commodity price movements, developments in the Greek debt negotiations and influential international reports (such as the US Consumer Price Index).
On Monday the Pound Sterling to Danish Krone (GBP/DKK) exchange rate was trading in the region of 10.1540.