Another FX Peg to Watch:

The EUR/DKK peg has been holding for a long time and is under pressure as the market seeks safe haven analogous to what has been happening in EUR/CHF. Yesterday, the FT reported, “The head of Denmark’s central bank has warned that the Danish krone is coming under intense pressure from investors seeking a haven in Europe and betting that the currency’s peg to the euro could be cracked by the crisis. Nils Bernstein, the governor of the Danish central bank, said that the upward pressure on the krone was the most severe he had seen in his seven years as governor, and warned that negative interest rates could be on the cards if the problem continues.” Today, this is exactly what happened as Denmark sold DKK1.55B in 2% 2014 bonds with an average yield of -0.08% vs. +0.31% last. This stands in sharp contrast to the 18mth Spanish auction which yielded 5.107%.