Consensus forecasts win out
The one-month e/$ consensus forecast for example, which is derived from the mean of all contributors' views, is on average 97.49% accurate since January. Some weeks the consensus view is virtually spot on – notably when the aggregated view of 1.2046 forecast on April 16 fell short of the spot rate on May 17 of 1.2040 by just 0.05%. The 1m consensus forecast has also been within 1% of the spot rate for the periods leading up to February 9, February 16 and May 24.
The bad news is that most of these periods are characterised by stable currency markets – e/$ moved 0.28% for the month to May 17; 0.92% to February 9; 1.35% to May 24 and 2.95% to Feb 16.
The conclusion? The consensus forecast is a good indicator of future moves – as long as the markets don't move much!
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