Greek turbulence could delay the Danish normalisation

If the crisis in Greece escalates, the immediate reaction will likely be a strengthening of the traditional safe-haven currencies including the Danish krone. 

This would imply a repetition of the movements in the early summer of 2012 when the eruption of the sovereign debt crisis caused the Danish krone to appreciate sharply and the central bank sanctioned rate cuts of a total of 25 bp. 

However, with the suspension of government bond issuance since January, liquidity in the Danish government bond market has declined significantly, one thing fundamentally different than in 2012.

This sharply reduces the likelihood of a major strengthening of the Danish krone in case of renewed unrest in the European financial markets, although it will very probably prolong the central bank's chances of further normalising Denmark's monetary policy, says Nordea.