'Fed not hiking any time soon, GBPUSD to strengthen modestly' - Nenad Kerkez, Admiral Markets

NENAD KERKEZ
PROFILE
• Current Job: Analyst and Full Time Trader at Admiral Markets
• Career: Holds a MSc Degree in Economics at the John Naisbitt University (formerly known as Megatrend). Works as Senior lecturer and market analyst for Admiral Markets

View profile at FXStreet

Nenad Kerkez is an analyst and trader who has been in the market since 2008 and works closely with Admiral Markets as their Head Lecturer and Market Analyst. He is well known in the FX Community, ranking in the top 10 traders and analysts in the Forex Factory High Impact Members Ranking.

Nenad covers over 25 currencies on an intraday basis and has a Masters in economics. He also developed CAMMACD TM, a proprietary trading and analysis strategy. Further, he is the co-founder and head of Elite Currensea Trading, an educational website for currency traders.

How long do you expect this current USD weakness to dominate the FX markets?

USD weakness should continue until the Britain referendum. I do not see any imminent need for the Fed to raise rates with US CPI data failing to impress, and with the potential risks associated with a Brexit, I would expect the Fed to remain cautious until the Britain referendum is held.

Do you expect a Fed rate hike this year?

 

This really depends on whether the Oil price rally can continue and provide for a revision in inflation expectations in the US economy. A US rate hike, if any this year, could occur after the Britain referendum, so for me, there is no US rate hike until at least July. Beyond July and its probably a little early to say, it really depends on CPI data from the US, and whether risky asset prices (Eg Stocks and Property) remain stable.

With Brexit scenario apparently losing strength in the polls, will the pound strengthen in the coming weeks? What’s the most interesting pound currency pair to trade?

 

 

Yes, the GBP should strengthen modestly in months to come, particularly if Britain decides to remain in the EU. I would be looking for offsetting currencies that may be showing signs of weakness to exploit the GBP strength. This may include GBPUSD, given my views that the Fed will be not hiking anytime soon. In addition, any offsetting weakness in commodities prices, and I'd be looking at GBPAUD and GBNZD, and any other exotic currencies linked to commodities prices.

Do you foresee USDJPY rebounding higher after this post-BOJ inaction massive fall or should we expect the pair to keep going down to 105?

 

 

Every trend needs a retracement. 105.20 zone historically shows strong buyers, so I expect a rebound from the zone that will be in a form of retracement. How big retracement will be we still need to see but according to historical vs now moment concept, 105.20 should reject the price initially.

Oil prices have had a great month of April. Do you think this is just a rebound, or will the oil market finally escape from the oversupply that brought prices to lower-than-30$ per barrel?

 

 

Recent history suggests that Oil prices don't stay low for long periods of time. I think Oil prices will remain firm now, with speculators starting to re-enter into this space. I expect Oil to return back to the USD50/bbl level in the very near future. Excess supply in the USA is still growing, but I see signs that US rig counts are reducing, so in the interim the supply imbalance should correct in months to come.

Should we expect then the USDCAD bears to keep profiting as they have done the last month?

 

 

CAD is linked to oil. Correlation is strong. It is important to note that based on its historical relationship, when oil prices rise, the USD/CAD falls and vice versa: when the price of oil goes down, the USD/CAD rises.

 

The Canadian economy is highly dependent on its exports, and 85% of its exports go to the United States. For this reason, the USD/CAD can be greatly affected by how American consumers react to changes in oil prices. When U.S. demand increases, the price of oil rises and the price of the USD/CAD goes down. When the U.S. demand falls, the price of oil decreases and the USD/CAD price rises.