'Expect weakness in Gold in 2017 as investors move to Fixed Income looking for a yield' - 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.

The first week of the year has seen finally a bit of a retracement for the USD. Do you think this is just a dip and USD strength is here to stay?

I believe the US Fed will continue to gradually raise rates in the US leading to gradual USD strength in the medium term.  One thing that could lead to earlier rate hikes is if the unemployment rate was to drop sharply below the 4.5% unemployment rate as demand pressures might spark inflation.  The unemployment rate is almost at that level having dropped to 4.6% in November.

What do you think about the USDCNY? Will the cross reach 7.00? Has the Chinese government the ability to stop the bullish momentum?

At this stage, this pair has every possibility to reach 7.00, the PBoC with its dwindling FX reserves still have plenty of ammunition to support the currency on further weakness on the CNY. Nonetheless, all eyes must be on Consumer Spending and Manufacturing activity in China to see if their economy can maintain their high economic growth rates to the envy of the developed world.

Do you think the AUD is at risk of having a hard fall if China gets into financial turmoil?

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.  This is mainly because Australia’s economy largely affected by a slowdown in China is mainly the Mining Sector, namely the building materials required in China like Iron ore.  Australia’s economy is largely a Services economy, representing some 57% of GDP, and so, I think the AUD could weaken during a China slowdown but not experience a hard landing.

What about Gold? Has it bottomed out?

As the US Fed normalise 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.

What would it be your advice to trade Trump’s tweet bombs? 

I think in due time we will see whether Trump’s erratic suggestions are likely to lead to action, at this stage we do not know if he will act on what he suggests.  At this stage, I’d say take his erratic words as a grain of salt and try to trade on them until we get a clearer picture of what he intends to implement.