'Some of Trump moves not very encouraging for USD, outlook uncertain' - Nenad Kerkez, Admiral Markets
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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
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.
What’s your take on the USD recent swings? Are Trump’s announcements positive or negative for the greenback in the long-run?
We saw DJIA breaking 20.000 level that was supported by strong Japanese trade data. Additionally the rally in stocks had a positive impact on U.S. Treasury debt yields. If you remember my latest Video podcast on US elections I was clear that USD/JPY will range between 113.00 and 115.00 and that is happening now. However some latest Trump moves are not very encouraging for USD. Overly protectionist bias can damage the USD. IMO, investors are interested to see more focus on economic stimulus not on protectionism itself. Don’t forget that Trump’s policy might be also bad for Texas if Trump gets his 20 percent tariff on imports from Mexico. In the long run, not having a focus on anything but trade protectionism will hurt the dollar. However if we see an improvement in the US fiscal policy and additional FED hikes (I predict 2-3 in 2017), the USD might additionally strengthen vs JPY targeting 125.00 also because the Japanese investors want to buy rather than repatriate.
I can conclude that outlook for the US economy at this point is uncertain.
What do you expect from the Fed on this week's meeting?
I don’t expect any change in interest rate on next FED meeting. I think there might be some cues about raising rates at the next meeting in March, As Trump has already made big changes in policies , I think the FED is waiting to see what will come off all those new changes and act accordingly.
Oceanic currencies as AUD and NZD have been quite on the move last weeks. What’s your outlook on the AUDNZD?
As the Australian economy has 32.2% of its exports going to China, an economic slowdown in China is likely to cause some economic impact to Australia, however, it is unlikely to lead to a hard landing on the AUD. Australian currency is a hard commodity currency while New Zealand currency is a soft commodity currency. I Personally think that Australian economy is stronger than of New Zealand but don’t forget that Australia is a key trade partner for New Zealand just like United State is important for Canada. I think that dips in AUD/NZD should be bought into.
US stocks at all-time highs, do you think a retracement is coming?
I am a bit concerned about equities over valuation. The DJIA peaked above 20.000 that is a strong psychological level. U.S stocks are very expensive now and the longer they stay expensive the higher the chance that the FED will hike rather sooner than later. Historically every strong rally has had its retracement so I’d suggest rather reaction then prediction. 20.000 levels is a support now. Traders should watch for 19.950-20.000 as support zone as we see an ascending scallop pattern with 2 bullish order blocks making a confluence for bullish rejections. Should the price drop below 19.880 there is a scope for continuation towards 19.600, trendline and H4 confluence.
What about Gold? Do you think current risk-on sentiment will continue to undermine the yellow metal?
As the US Fed start to normalize rates this year, it is likely to steer Investors away from speculative investments like Gold to Fixed Income as it offers a yield. I expect further weakness in Gold in the coming year, however, should we experience unexpected rapid inflation, then I can see Investors flocking to Gold in such an environment.
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