The Danish krona has moved sideways in the past few weeks as investors watch the actions of the country’s central bank. The EUR/DKK and USD/DKK pairs are also reacting to the strong performance of Novo Nordisk, the biggest company in the world. According to TradingView, the USD/DKK pair was trading at 7.02 on Thursday while the EUR/DKK was stuck at 7.46.
Novo Nordisk earningsThe biggest Danish news on Thursday came from Novo Nordisk, the biggest company in the country. In a statement, the firm said that its total sales jumped by 38% in the last quarter to DKK 58.73 billion, which is equivalent to $8.2 billion. Its operating profit surged by 47%.
Novo Nordisk’s business has been in the spotlight this year because of the success of Wegovy and Ozempic. The two drugs have gone viral, especially in the United States where millions of companies are buying them. Indeed, Wegovy’s sales jumped to over 10 billion DKK in the quarter.
Novo Nordisk is an important company for Denmark and the Danish krona. For one, the company has a market cap of over $436 billion, higher than the annual Danish GDP of over $395 billion. It is the biggest private sector employer and taxpayer in the country. It paid over $1.3 billion in taxes in 2022 and the figure is expected to rise.
Novo Nordisk is important for the DKK currency for another reason. For one, it makes most of its revenue in the United States in USD. Therefore, its cash repatriation to Denmark tends to have an impact on the currency.
More so, the company is the biggest one in a sector that accounts for most of the economy. Indeed, excluding the pharmaceutical industry, Denmark’s economy would have contracted in the last quarter.
This situation has new risks for the Danish economy. For example, we have seen South Korea go through boom and bust cycles because of its reliance on Samsung. Similarly, we saw Finland go through a lost decade after the decline of Nokia.
In Novo Nordisk’s case, the challenge is that the weight loss drug industry is getting highly competitive from the likes of Eli Lilly and Pfizer.
Watch here: https://www.youtube.com/embed/rMOBoJ7P1Bg?start=330&feature=oembedUSD/DKK technical analysis
The daily chart shows that the USD to DKK exchange rate has moved sideways in the past few weeks. It has formed a bullish flag pattern, which is shown in green. The pair also remains above the 50-day and 200-day moving averages, which made a golden cross recently.
It is also a few points below the 38.2% Fibonacci Retracement level. Therefore, the outlook for the pair is bullish, with the initial target being the year-to-date high of 7.14. A move above that level will see it bounce back to the 50% retracement at 7.20.
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