Netherlands International: Danish krone forward contracts imply that the market is positioning itself for Greenland risk.

Chris Turner, an analyst at Holland International Group, stated that in the context of US President Trump's threat to seize control of Greenland from Denmark, investors seem to be positioning themselves for pressure on the Danish krone. He noted that this pressure often manifests through forward contracts, as Denmark maintains the euro-to-Danish krone exchange rate within a narrow range through the European Exchange Rate Mechanism II. Turner observed that the implied yield on Danish krone forward contracts has increased, possibly indicating that market participants are beginning to deploy positions to hedge against some pressure. Holland International Group further believes that this may also reflect market concerns about the Danish bond market facing challenges or the risk of interest rate hikes. The Danish central bank may also be intervening to support the Danish krone, leading to liquidity shortages and affecting forward contracts.