The central bank of Denmark presented its December numbres. Analysts at Danske Bank point out the Danmarks Nationalbank (DN) resumed intervention with the second highest monthly purchases ever. 

Key Quotes: 

“The big news in today's release was the significant FX intervention that took place in December. It was the second highest monthly FX intervention purchase on record only surpassed by the rally into DKK in January 2015. We have been arguing that DKK strength in December and subsequent need for FX intervention was mainly due to year-end tightness in the DKK money market. The size of the inflow to the FX reserve means it was likely coupled with investor rebalancing flows.”

“The large inflow to the FX reserve will likely fuel speculation that another unilateral rate cut is coming in Denmark. However, we do not want to rush to conclusion.”

“Downwards pressure on EUR/DKK spot has eased to start the year and if the need for intervening in FX markets has ended for now, DN will probably draw the same conclusion as us and stay put on interest rates. Hence, we stick to our view that DN will keep policy rates unchanged despite the sizeable FX intervention in December.”