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With Q3 2012 over, I’ve decided to do a little research on my own to see what the world’s largest banks are forecasting for the last three months of the year. I think it’ll beneficial for all types of traders as they plan their strategies for the fourth quarter.

Without further ado, here’s what big banks are saying with respect to future exchange rates:

Q4 2012 Currency Forecast

From the table, it seems that most big banks think that the safe-haven dollar will be the currency that will dominate Q4. For the European currencies, the dollar is expected to climb 0.008% versus the euro, 0.004% versus the pound, and 1.65% versus the franc.

Meanwhile, against the Japanese yen, the dollar is predicted to post a whopping 27.27% rise. The outlook for the major commodity-based currencies is also negative. All of them (the Australian dollar, Canadian dollar, and New Zealand dollar) are expected to fall lower from their current levels.

The forecasts are quite intriguing especially since the Fed is currently implementing an open-ended quantitative easing program. Moreover, the Fed has also indicated that they would probably keep rates at “exceptionally low” levels all the way until mid-2015.

Normally, bond-buying activities of central banks and a loose monetary policy stance are considered bearish for the domestic currency.

Do the banks know something that we don’t? Or do they think that the macroeconomic situation of other countries is worse than the U.S.? Or do they simply think that risk aversion will be the dominating market theme? Ah, these are questions that only they can answer.

Now, before I end this piece, let me just give out a few words of caution. One thing you should remember is that these forecasts are merely educated guesses, which means they will change as data changes.

In the forex market nothing is ever certain and even the most well-funded, smartest researchers in the world cannot accurately predict where the price will be three months from now.

What this implies is that do not base your trades solely on the figures. Instead, use the forecasts as a guide to the big market players‘ sentiment to supplement to your own analysis.

That’s it for today folks! Let’s all hope for a good Q4 2012! Cheers!