You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Global Macro Trading Journal
- Thread starter Daal
- Start date
How does the real estate market in Sweden & Denmark look in your view? Lower interest rates will just inflate a potential bobble, no?
http://www.marketmoving.info/swedish-housing-market-bubble-poses-huge-risks/
http://www.marketmoving.info/swedish-housing-market-bubble-poses-huge-risks/
Relevant article from FT:
http://ftalphaville.ft.com/2015/01/30/2106492/is-the-dkk-the-new-chf/
Central bank data release 3 February:
"Whilst press releases from the Danish central bank admit such interventions have been happening, we won’t find out their true scale until February 3, when the January data for the central bank is released."
List of signs that would indicate peg may fail:
* high inflation (suggested by Daal)
* EUR/USD weakness (suggested by Daal)
* DKK strength (recent low 7.4275)
* high DKK inflows, such as those released by Danish central bank
* further interest rate cuts, especially if they are unsuccessful in stopping DKK strength
* rising prices for housing and equities (suggested by shfly)
*****
Interesting to see that on Thursday 29th and Friday 30th, the DKK strengthened a little just after 11.30am ET, when European equity markets closed.
This could suggest the amount of DKK selling decreased because there wasn't as much EUR support from the Danish Central Bank.
.
http://ftalphaville.ft.com/2015/01/30/2106492/is-the-dkk-the-new-chf/
Central bank data release 3 February:
"Whilst press releases from the Danish central bank admit such interventions have been happening, we won’t find out their true scale until February 3, when the January data for the central bank is released."
List of signs that would indicate peg may fail:
* high inflation (suggested by Daal)
* EUR/USD weakness (suggested by Daal)
* DKK strength (recent low 7.4275)
* high DKK inflows, such as those released by Danish central bank
* further interest rate cuts, especially if they are unsuccessful in stopping DKK strength
* rising prices for housing and equities (suggested by shfly)
*****
Interesting to see that on Thursday 29th and Friday 30th, the DKK strengthened a little just after 11.30am ET, when European equity markets closed.
This could suggest the amount of DKK selling decreased because there wasn't as much EUR support from the Danish Central Bank.
.
Danish central bank: 4th cut in last 19 days to protect currency peg:
rate cut 4 on Thursday 5 February, now -0.75%
http://www.zerohedge.com/news/2015-...mark-danish-central-bank-cuts-rates-fourth-ti
As ZH points out, this is becoming a regular Thursday thing.
rate cut 3 on Thu 29 Jan
http://www.zerohedge.com/news/2015-...ark-danish-central-bank-cuts-rates-third-time
rate cut 2 on Thu 22 Jan
http://www.zerohedge.com/news/2015-...cond-time-week-intervenes-market-preserve-peg
rate cut 1 on Mon 19 Jan
http://www.zerohedge.com/news/2015-...r-slashes-rates-20bps-amid-currency-peg-fears
Chart showing rate cuts 1 and 2:
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01/20150122_EURDKK.jpg
.
rate cut 4 on Thursday 5 February, now -0.75%
http://www.zerohedge.com/news/2015-...mark-danish-central-bank-cuts-rates-fourth-ti
As ZH points out, this is becoming a regular Thursday thing.
rate cut 3 on Thu 29 Jan
http://www.zerohedge.com/news/2015-...ark-danish-central-bank-cuts-rates-third-time
rate cut 2 on Thu 22 Jan
http://www.zerohedge.com/news/2015-...cond-time-week-intervenes-market-preserve-peg
rate cut 1 on Mon 19 Jan
http://www.zerohedge.com/news/2015-...r-slashes-rates-20bps-amid-currency-peg-fears
Chart showing rate cuts 1 and 2:
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01/20150122_EURDKK.jpg
.
Similar pattern in EUR/DKK as with last Thursday's rate cut.
Rate cut announced at 10am ET. EUR/DKK goes from 7.4465 to 7.4486 at about 10.05am.
Then falls below 7.4465 at 10.11am.
Now at 10.40am ET it is at 7.4440, again with DKK strength despite the 0.25% rate cut.
Also EUR/DKK was above 7.4490 between 6.30am and 7.30am ET, but those levels were not attained after 10am following the rate cut announcement.
.
Rate cut announced at 10am ET. EUR/DKK goes from 7.4465 to 7.4486 at about 10.05am.
Then falls below 7.4465 at 10.11am.
Now at 10.40am ET it is at 7.4440, again with DKK strength despite the 0.25% rate cut.
Also EUR/DKK was above 7.4490 between 6.30am and 7.30am ET, but those levels were not attained after 10am following the rate cut announcement.
.
"Denmark’s central bank slashes rates to record low" (5 February 2015)
http://www.ft.com/cms/s/0/1a54cae6-ad4c-11e4-bfcf-00144feab7de.html
"Nationalbank revealed on Monday that it had spent DKr106.5bn ($16bn) defending the peg in January, swelling its balance sheet by almost a quarter to a record level.
"But economists noted that Denmark’s foreign exchange reserves still represented roughly 30 per cent of GDP compared with about 80 per cent for Switzerland."
.
http://www.ft.com/cms/s/0/1a54cae6-ad4c-11e4-bfcf-00144feab7de.html
"Nationalbank revealed on Monday that it had spent DKr106.5bn ($16bn) defending the peg in January, swelling its balance sheet by almost a quarter to a record level.
"But economists noted that Denmark’s foreign exchange reserves still represented roughly 30 per cent of GDP compared with about 80 per cent for Switzerland."
.
Not a super high confidence trade because, who knows, maybe the EUR will rise on a Grexit. William Buiter thinks so. I think it will go down but I will try to follow the reaction to the news to see how people are reacting to the chances of that. If people start to buy EUR on Grexit indicative news, I will bail out of the trade sooner with a smaller loss