The 21-year-old is expected to finalise a short-term switch to St James' Park in the next 24 hours, having arrived in the North-East on Monday night to undergo a medical.
Kenedy has been used just five times this term, each coming in domestic cup competitions, but Chelsea boss Conte has left the door ajar for the young Brazilian to force his way into the reckoning next season.
"I think he is going on loan to Newcastle. He needs to play regularly and to go to Newcastle is a great challenge for him," Conte told reporters ahead of his side's EFL Cup semi-final meeting with Arsenal.
"It is a great way for the club, we used same way for Christensen. Now he starts for Chelsea. It is a great opportunity but he knows that he has to be ready to fight to play for Newcastle.
"Last season in the first six months for Watford he struggled to play, but now he is more ready. He played with us many games and he can show his potentiality."
Kenedy made one league appearance for Watford during last season's loan stint, totalling just 16 minutes.