'Volatility here to stay for now' - 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.

Last couple of weeks have triggered big volatility into the FX markets. Do you expect this trend to continue in the following weeks?

I believe volatility will be in full swing again as we head into Earnings seasons for Corporations across the globe, the aftermath of Brexit, and as US elections approach.  Any fail by the Fed to raise rates will be looked upon negatively by the market and cause short term volatility.  Implementation of the oil cutbacks proposed by OPEC will be quite difficult to monitor and maintain, so any failure to implement this plan will cause volatility in the oil price and associated stock markets.  It appears that the volatility is here to stay for now.

Do you think the GBPUSD will continue to drop? What are the key levels?

Sell on rallies continues 1.2500 is the interim resistance followed by 1.2800 and 1.2950. To the downside, round(ed) numbers are key support levels. 1.2000, 1.1950, 1.1900, 1.1850 etc.

USD seems to be weighing in several factors right now: economic data, Fed talk and the US election. Which of these do you think is more important right now?

All of these factors are important to the USD at the moment, as we discussed the consequences of trade protectionism at the centre of Trump’s campaign.  All eyes are still remained glued to US inflation data, which is currently inhibiting a rate hike by the Fed, and any signals from the Fed of possible rate hikes in advance will surely lead to volatility in the USD.

Is the ECB taper talk something to seriously consider? Will it bring sustainable EUR strength?

Whilst Draghi has given no indication that the QE programme will end before March 2017, its scheduled end date; ECB tapering could happen before the conclusion of the QE programme due to the possibility of a lack of quality and available Euro Bonds that fill the criteria of the ECB bond buying programme.  Whilst many analysts in the market consider that the QE programme may extend for a period after the March 2017 scheduled end date, we would only be postulating to presume so.

Can EURGBP reach parity if Brexit talk keeps gaining strength?

This really depends on the trade terms that Britain is able to agree with the EU, with roughly 53% of UK exports going to EU nations.  UK exports in total account for 17% of total UK economic output, so a large proportion of future UK trade and economic activity hinges on the terms of trade with their EU counterpart.  Nonetheless, when we look at the fundamentals of the UK economy, it’s in a far better shape than their EU counterpart, with unemployment and inflation statistics in a better position.  We must watch for inflation in the UK as a result of import inflation due to the weaker GBP, and this may lead to a shock move in the near future for the BoE to raise rates.  As for EURGBP, if 0.9820 breaks and monthly candle closes above above it, parity could be the possibility.