Nearly all Major Financial institutions around the world issue 1 Month, 3 Month, 6 Month, 1 Year Forecasts so on and so on. They issue these for nearly every asset class from US 10 years - S&P500 - EURUSD etc.

But seeing as this is primarily filled with Forex Traders I thought I would share with you the forecasts for the major FX pairs so I will start by showing you the Forecast Curves Mean for all the main contributors from around the world from banks like; UBS, Deutsche bank, Goldman Sachs, Barclays for example.

EURUSD
We'll start off with the EURUSD Forecasts, the Green Dashed line shows the mean forecast for the different lengths of time, with the two Purple lines showing the Min/Max forecasts from all the contributors. We can see that the majority of analysts believe the EUR will depreciate vs. the USD

  • 1 Month Mean - 1.3090 / 1 Month High - 1.3450 / 1 Month Low - 1.27
  • 3 Month Mean - 1.2930 / 3 Month High - 1.3780 / 3 Month Low - 1.22
  • 6 Month Mean - 1.2790 / 6 Month High - 1.3700 / 6 Month Low - 1.16
  • 12 Month Mean - 1.2690 / 12 Month High - 1.3700 / 12 Month Low - 1.12
This Shows the historical rolling 1 month mean rate vs. the EURUSD spot rate with the Spread shown in the lower tab. Everyone will have different views on the accuracy of these but the spread chart rarely crosses 0 (The level at which the prediction would be correct) apart from when the Forecast changes.

GBPUSD:


The GBPUSD rate is seemingly thought of as being flat over the next year, but the min/max shows huge disparity.


  • 1 Month Mean - 1.6150 / 1 Month High - 1.6500 / 1 Month Low - 1.5800
  • 3 Month Mean - 1.6010 / 3 Month High - 1.7300 / 3 Month Low - 1.5200
  • 6 Month Mean - 1.5920 / 6 Month High - 1.7400 / 6 Month Low - 1.4500
  • 12 Month Mean - 1.5860 / 12 Month High - 1.7800 / 12 Month Low - 1.3000
  • When looking at the 12 month forecasts there are some crazy predictions from 1.78 down to 1.30, those are some serious moves.

    But once again a spread chart of rolling historical forecast versus the spot rate is shown, this seems to be less reliable than on EURUSD.

    AUDUSD:

    AUDUSD like GBP and EUR shows weakening over the next 12 months and general USD strength across the board.


  • 1 Month Mean - 1.0400 / 1 Month High - 1.0600 / 1 Month Low - 1.0100
  • 3 Month Mean - 1.0330 / 3 Month High - 1.0700 / 3 Month Low - 0.9600
  • 6 Month Mean - 1.0300 / 6 Month High - 1.1000 / 6 Month Low - 0.9000
  • 12 Month Mean - 1.0160 / 12 Month High - 1.1200 / 12 Month Low - 0.85

  • Like GBPUSD there are some analysts who are predicting a huge change over the next year.


    It seems however analysts have been more accurate in the past, however this could be due the more trending nature of the AUD with regard to Yield differentials and so this is to be expected.

    USDJPY

    Finally I am showing you the USDJPY rate and forecasts, However the recent rise hasn't given banks time to update their forecasts so I won't follow this up with any analysis.


    Investment Bank Trade Ideas :

    Credit Suisse have called a Long EURUSD trade initiated at 1.3295 on Jan. 14th, and are targeting 1.3480 with stops at 1.3260, saying a breakthrough of 1.3249/57 could see weakness towards 1.3140 and then 1.2998.



    Nomura have initiated a Long AUDUSD by buying $15 million at 1.0515 looking for 1.1081 and stops at 1.0300 citing these reasons :
    - Global risks Receding and 2013 looks to be low Vol and pro Carry supporting AUD.
    - Nomura see Australia 1st Quarter Basic Balance to improve due to low bond redemptions.
    - Increase in export capacity and oil prices lead to higher exports.


    Now these Bank trades aren't to be seen as too important as there are certain banks such as Goldman Sachs have a reputation of doing the opposite of what they say with there FX specialist Stolper getting the calls 100% wrong on his 10 past calls.

    Thank you for reading and hope this has helped.

    Adrian.
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