Swiss Franc is the official currency of Switzerland and Liechtenstein (CHF). Danish krone is used in Denmark, the Faroe Islands and Greenland (DKK). The Swiss franc is divided into 100 rappens (centimes). Danish krone is divided into 100 ores.
The CHF/DKK pair is hardly traditional. Both countries are located a short distance from each other, have a small territory and a relatively weak economy with a turnover of up to 1 trillion dollars a year. Despite this, there is a circumstance that makes earnings on a pair very profitable.
Did you know that the Danish krone was pegged to the euro at the exchange rate of 1 euro 7.46038 kroner? This means that the euro always costs that amount of kroner, with a margin of 2.5%. If you want to exchange euros for kroner, then it makes no sense to wait for the exchange rate to increase because this will not happen.
So why is the krone pegged to the euro? This dates back to 1992, the Maastricht Treaty and the creation of the euro. The Single Currency Pact initially required all members of the European Union (except the UK) to join in replacing national currencies with the euro. However, after a referendum in June 1992, the Danish people rejected this. As a result, Denmark retained the krone.
As for the Swiss franc, the country’s currency is tied only to its economy. This means that any fluctuations in the euro open a trading corridor and provide an opportunity for earnings.
Since Switzerland is perceived by most investors as the best option for hedging capital during financial crises and unstable geopolitics, the CHF/DCK pair can be quite interesting. Amid the controversial euro, the jumps in the oil and commodity markets, the franc is gaining strength. Krone is losing ground during such moments.
The Danish economy is mixed and diverse, with a strong reliance on human resources. The country, however, also has many valuable and significant natural resources, such as gas and oil wells in the North Sea.
Denmark’s nominal GDP is the 32nd largest in the world and is valued at $333 billion. Although the country does not have an established minimum level of wages, it is also the country with the lowest income inequality in the world, and the unemployment rate in the country is only 6.2%, which is significantly lower than the average level of 11.2% in the eurozone.
Cooperative production has a long tradition in Denmark, and several sectors are involved in this style of production, including banking and housing.
Denmark’s main exports include manufactured goods, which account for 73.3% of total exports. Moreover, chemicals and fuel make up the bulk of it.
Other important export commodities include agricultural products, meat, fish, and energy products.
The value of all exports of goods and services is more than half of the country’s GDP. Denmark pursues a liberal trade policy within the EU, and the standard of living in the country is on a par with other countries of Western Europe.
Denmark’s largest non-European trading partner is the United States, which accounts for about 5% of Denmark’s total merchandise trade.
All these facts indicate only one thing – the country’s economy is very well developed, just like Switzerland. But pegging the national currency to the euro scratches all achievements in the financial sector from the point of view of trading. Trade with this pair is purely technical.
Traders provide support between 1.21 and 1.2250 and then sell between 1.24 and 1.25. The range, however, is narrowing as traders struggle for profit. Such fluctuations are easily traced using indicators and allow you to get 300-400 points of profit in the medium term.