'JPY to keep dropping as long as risk-on sentiment stays' - 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.

USD retook the lead in the FX markets last week. With the current monetary policy differentials: Can anything derail the long-term USD bull ride?

As CPI starts to creep towards the 2% range, we must watch it closely in other regions like the EU, Australia, NZ, and other important economies.  If it starts to climb long-term, then the competing currencies will challenge the USD.

As much as you like trading the JPY crosses, they are on a notable uptrend: Do you expect this trend to last?

Yes, so long as we have a risk-on mentality in the markets, then JPY crosses should continue to climb. The major risks now that must be watched is China's debt levels and USD denominated debt in foreign countries.  If these boil over, then risky assets (Equities and Property) will drop along with the JPY due to their large carry trades.

Where are your mid-term targets for USDJPY and EURJPY?

USDJPY 119.90 and EUR/JPY 129.00.

Is the recent JPY fall more due to a risk-on trade or because of the BoJ accommodative monetary policy?

If you are referring to USD/JPY drop on Friday, you know I got into buy on dip then 😊. I am long on USD/JPY and the drop was due to profit taking following a steep uptrend of USD. That’s called adjusting the position or position squaring.

Another big mover has been AUDUSD, reversing its early-year surge: Is the Aussie targeting below-0.72 YTD lows?

We have seen solid falls in the price of Iron Ore and Oil (Eg.Gas), these are the major exports for Australia, and we should expect a pullback in AUD if those markets make a pullback too.

What about Oil? Who do you think will win the producers battle between OPEC and US shale industry? Do you expect the 50$ level to continue attracting the price?

I think we will see the price of Crude Oil to hover between the USD40-USD55 range. The costs of US shale has dropped dramatically, so any offsetting oil cut backs by OPEC will be absorbed by the US shale industry.