USD/DKK Outlook:
Bearish, as the rate is below its 90-day average and near recent lows amid a decline in US economic activity.
Key drivers:
• Rate gap: The Federal Reserve has held rates steady, while Danmarks Nationalbank's previous rate cut works to stabilize the krone.
• Risk/commodities: The recent softening in US retail sales points towards weakening consumer spending, negatively impacting the USD.
• One macro factor: Rising geopolitical tensions and trade policy uncertainty have led to reduced demand for USD assets as investors seek alternatives.
Range:
The USD/DKK is likely to drift within its recent 3-month range, given the current pressures.
What could change it:
• Upside risk: A positive surprise in upcoming US employment data could bolster the USD.
• Downside risk: Increased volatility in global markets or further policy shifts in Europe may exacerbate downward pressure on the DKK.
