With little in the way of market moving domestic data out of Denmark over the past week, the Danish Krone was mostly influenced by movements of the Euro. As the currency is pegged to the Euro, the concerns over a possible Greek default and exit from the Eurozone pulled it lower against a number of major peers.
The Danish Krone weakened to a session low of 0.09723 against the Pound Sterling.
Last week saw the Danish Krone mirror the Euro’s volatility against the Pound. Economic data out of the single currency Eurozone suggests that the region’s economy is strengthening but remains under threat from the uncertainty created by the ongoing crisis in Greece.
Fears are growing that Athens will not have enough time to negotiate economic reform measures needed to receive much needed bailout funds. Two documents released over the weekend showed that Greece’s financial situation is becoming increasingly desperate as time to reach a deal with its creditors runs out.
According to one of the documents, the International Monetary Fund (IMF) believes that there is no chance for Greece successfully repaying its debts due over the summer. The letter added that there was still only limited progress made between the two sides. Prime Minister Alexis Tsipras has come under increasing pressure from members of his left-wing SYRIZA party to not back down on implementing reforms.
The reports increased speculation that the Greek government could hold a referendum if it is given a ‘take it or leave it’ offer by its creditors. Cyprus was given a similar choice at the height of its financial crisis as creditors warned that if it did not make reforms then the backing of the European Central Bank would be withdrawn. With the deadlock in Greek negotiations, it is likely that a similar ultimatum will be made.
The Danish Krone will remain influenced by events in the Eurozone until Friday when the weeks only set of domestic data is released. Consumer confidence and retail sales reports are both due. Economists are forecasting that consumer confidence softened in May and that retail sales in April dropped from the 0.5% seen in March to 0.2%.
The Pound Sterling meanwhile will experience volatility throughout the week due to the release of a number of important data releases such as UK inflation, retail sales and the latest Bank of England (BoE) policy meeting minutes.