'There will be no rate hike in the US' - 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.

Next September 21st is a key date on the calendar, as the BoJ and the Fed will hold their monetary policy meetings. What do you expect out of both central banks?

I believe with inflation expectations in the US (and most of countries across the globe) not being met yet, there will be no rate hike by the US.  Similarly, I expect a cautious approach by the BoJ to tackle the issue associated with low inflation, as the economic effects of negative bank rates in Japan are still to be assessed.  This may pave the way for a different approach from the BoJ and the Govt of Japan, perhaps more emphasis on fiscal policy could help stimulate inflationary pressures.

How do you expect the USDJPY to trade on the mid-term with both central banks facing key decisions?

In the mid-term, I expect some risk-off sentiment to prevail as Global Equities seem to be a resistance levels again and with selling momentum starting to build again at the end of last week.  On that basis, I think UJ may be caught in a range between 100.00 and 105.00.

Are you bullish or bearish on the Pound against the US Dollar and the Euro?

At this point we can see that the GBP has stabilized vs EUR so I expect the pair to trade both ways. Short term EURGBP should be sold on rallies. As for GBPUSD it is ranging, so it can also be traded both ways, depending on the shorter term trend.  Buy the dips and sell the rallies in the way to go.

Are Emerging Markets currencies poised to gain more ground after the recent weakness shown by the economic data in Western economies?

Most Emerging markets are facing concerns associated with commodities devaluations which has hurt their exports and the value of their respective currencies.  According to a PWC study, a rate hike may see that some Emerging markets, particularly Turkey, Colombia, South Africa and Peru adversely affected by the large amount of foreign currency debt they hold relative to their GDP.  The problem with a normalising rate environment in the US, means an increase on the loan repayments required by these countries, due to the rising rates and the rising USD relative to their local currency.  This may be the wild card event that precipitates the next Global Financial Crisis, that being the foreign currency debt in Emerging Markets.  Emerging markets least effected by foreign currency debt include the Philippines, India and Mexico.

How much can Gold profit off a risk-aversion scenario with the upcoming US election?

It is likely that we may see risk-off sentiment leading into the US election due to the uncertainties alluding to the policies of both presidential candidates.  Trump’s promise to make the USA great again is centred around trade protectionism to bring back jobs in the USA, which is likely to curb economic growth across the globe.  Like Brexit, it will likely bring further uncertainty in the global economic environment, and where there is uncertainty, there is value in the Gold price.