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Article / 28 June 2016 at 7:49 GMT

Letter from Paris: 'The panic is behind us'

Editor / Saxo Bank
  • Volatility to remain high, but panic on the decline
  • Central banks have stabilised the post-Brexit trade
  • USDCAD an interesting pair given oil, Brexit

Sans souci? Not quite, but Saxo's Paris office says the worst 
of the post-Brexit panic may be behind us. Photo: iStock 

By Michael McKenna

This morning's release from Banque Saxo in Paris is at once sanguine and wary, noting that while "the panic [that followed the UK's vote to leave the European Union] is behind us" while warning that volatility is likely to remain elevated for several weeks, as is the safe-haven bid.

Gold and the japanese yen are the primary safe-haven assets at the moment, continues our Paris correspondent, and sterling – as we are all by now aware – remains Brexiteers' biggest victim. Ultimately, however, Saxo's Parisian office feels that the risk of a new financial crisis sparked by the surprise vote remains minimal.

"Investors are well aware that the present situation has little to do with[the suite of factors that led to] the 2007-8 crisis," says Banque Saxo, adding that the European financial sector, taklen as a whole, remains relatively solid.

"There isd no liquidity crisis at present," continues Saxo's Paris office, adding that rapid intervention from multiple central banks, particularly those of the UK and Switzerland, has allowed world markets to stabilise somewhat in the wake of Thursday's vote.

While bank shares have taken a severe hit in the wake of Brexit, says Saxo Paris, the current ambiguity surrounding the legal circumstances of UK banks operating on the Continent could give a boost to the big banks of the EU's remaining 27 nations (particularly the core).

One asset that Banque Saxo is looking at today is the USDCAD, where the Brexit vote "naturally favours the dollar versus other currencies" and where "the CAD is seeing no help from oil after a sharp downturn after the British vote".

The boundaries for a USDCAD trade, says Banque Saxo, consist of a rising 100-day moving average which can ultimately be traced to resistance at 1.3090. If this area is to be breached with strong confirmation (such as a rally in WTI crude), this pair could conceivably rally higher. If not, however, and if oil remains uncooperative, a slide back towards 1.30 appears likely.

USDCAD daily chart:

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Source: Saxo Bank

Michael McKenna is an editor at


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