Big Banks’ Exchange Rate Forecast for Q1 2013

Now that the clock has ticked 2013, I think it’s about time to do a little research to see what the largest banks in the world are predicting for the forex market during the first quarter of the year.

Below is a table that contains the median forecasts of large banks, include giants like Citibank, Goldman Sachs, HSBC, and BNP Paribas:

Big Banks' Exchange Rate Forecast for Q1 2013

From the table, we can clearly see that most big banks believe that the safe haven dollar will reign supreme in Q1. For the European currencies, the dollar is expected to climb roughly 2.6% versus the euro, 1.4% against the pound, and 2.1% versus the franc.

Meanwhile, versus the Aussie and the Kiwi, the dollar is predicted to rise 0.8% and 1.4%, respectively. The only major currencies the dollar is projected to lose against are the yen and the Loonie.

Given how the dollar has been losing out over the past few days, it makes me wonder what these banks know that retail traders do not.

Do they think that the dollar will gain on risk aversion? Or do the banks think that U.S. fundamentals are better than those of other countries? Perhaps they believe that the fiscal cliff issue will be resolved, and that it will trigger a dollar-buying frenzy?

In any case, at the end of the day, these forecasts are just that – forecasts. This means that they will change as the market environment develops.

As I’ve always said in the past, nothing can be predicted with 100% accuracy in the forex market, and even the most well-funded, brightest individuals in the world cannot say where price will be three months from now. Remember to use these figures merely as supplement to your own research.

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