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Danske Bank's FX analyst Jesper Fjärstedt indicates that the Canadian Dollar (CAD) is expected to see a short-term decline in USD/CAD to 1.42 due to stretched short-CAD positioning, despite muted market reactions to PM Carney's upcoming election on April 28 and looming tariffs. Looking ahead, the bank maintains a USD-positive outlook, targeting a rise to 1.45 over the next 12 months. Investors are cautioned about the inherent risks and uncertainties in the market, emphasizing the need for thorough research before making investment decisions.
EUR/USD is currently around the 1.08 mark, following weaker-than-expected March PMIs from the euro area and stronger readings from the US. The euro area's composite PMI rose to 50.4, driven by manufacturing, while the US services index rebounded to 54.3. A consolidation around current levels is expected in the near term, with a long-term forecast of 1.06 in 12 months due to structural shifts in risk asset allocation away from the US.
Danske Bank A/S has initiated a share buy-back programme totaling DKK 5 billion, aiming to repurchase up to 45 million shares from 10 February 2025 to 30 January 2026. In week 12, the bank acquired 207,100 shares, bringing the total to 332,100 shares, representing 0.039% of its share capital.
Danske Bank has announced an increase in its dividend to DKK14.70, set to be paid on March 25, yielding 7.7%. Despite a history of dividend instability, the bank maintains a payout ratio of 60% and has shown strong earnings growth, though analysts forecast a slight decline in earnings per share over the next three years. Overall, while the dividend is being raised, concerns about its sustainability remain, suggesting investors may want to consider other income opportunities.
Danske Bank is set to increase its involvement with defense companies as Europe prepares for heightened defense needs. Currently not heavily invested in the sector, the bank is ready to provide additional capital to clients requiring support for fulfilling orders. Chairman Martin Blessing emphasized the financial sector's crucial role in Europe's rearmament, highlighting the demand for capital, credit, and financial technology.
Danske Bank A/S, Denmark's leading bank, operates in retail banking, market and investment banking, insurance, and asset management. By the end of 2024, it managed DKK 1,173.8 billion in current deposits and DKK 1,074.8 billion in current loans. The bank anticipates the Bank of England will cut rates in May, maintaining a 'gradual' approach.
The recent Bank of England meeting did not significantly alter the outlook for GBP, as the central bank maintained the Bank Rate at 4.50% with a slightly hawkish vote split. Analysts expect a 25 basis point cut in May, projecting the rate to end the year at 3.75%, while forecasting a decline in EUR/GBP.
EUR/CHF remained stable after the SNB's 25bp rate cut to 0.25%. The bank indicated that risks to inflation and growth are skewed to the downside, maintaining its guidance for potential further cuts, with a final reduction expected in June to bring the rate to 0%. Analysts remain bullish on the CHF.
EUR/USD has fallen below 1.09, struggling to gain traction despite a dovish FOMC stance and calls for rate cuts. The pair is expected to consolidate in the 1.08-1.09 range amid a strengthening USD and bearish sentiment reflected in declining risk reversals. No clear catalysts for a rebound have emerged, with jobless claims stable and the Philadelphia Fed outlook slightly positive.
Danske Bank A/S is set to enhance its support for defense companies as Europe initiates a significant rearmament strategy in response to security threats from Russia and a reduction in US military presence. Chairman Martin Blessing expressed the bank's readiness to engage with this sector, stating, “We are open for business,” following the bank's annual general meeting.
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