Danmarks Nationalbank continued FX intervention in May

Danmarks Nationalbank (DN) purchased DKK in FX intervention for DKK35bn in May leaving the FX reserve at DKK658.9bn and accumulated intervention since the beginning of April at DKK68.9bn.

"We expect it to take a substantial outflow on top of the intervention conducted in April and May to trigger a unilateral rate increase and forecast DN will hike the key policy rate by 15bp on 3M and 10bp on 6M to minus 0.50%." said Danske Bank Markets

Government deposits declined by DKK10bn in May to DKK225bn - issuance of government bonds is not likely to be resumed before government deposits have fallen below DKK100bn, which may not happen before H1 16.