The strictures of Denmark’s exchange rate peg means that the Nationalbank will follow the ECB’s lead as it hike rates further over the coming months. But with the krone remaining towards the “strong” side of its narrow de facto trading band against the euro, we think that Danish policymakers will tighten by slightly less than the ECB and allow the negative rate differential to widen from 10bps at present to 25bps by early 2023. Next week, we have pencilled in zero m/m growth in Sweden’s GDP Indicator in June, although this would still be consistent with a chunky 1.1% q/q increase in Q2 overall.
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