Of course, one of our most important tasks is to provide clients with accurate short- and mediumterm FX forecasts. While we usually hold fairly strong views on the medium-term direction of various exchange rates, it is almost impossible to successfully predict the timing of moves and identify precise targets within a specific period of time. Therefore, we have frequently been forced to revise our expectations when the spot level correctly moved beyond our short-term target. Consequently, our eventual projections end up pointing in different directions to the current spot level, depending on their time horizon. As a result, we have made various changes to our forecast model to improve estimates by focusing more explicitly on the medium-term horizon (six months), while reducing our efforts to identify the precise timing of expected moves. Clearly, we will continue to publish explicit 1 month and 12 month estimates to reflect our short- and long-term outlook. With exchange rates generally volatile, our new forecast table includes additional information together with specific “Action levels” for various currency pairs. These reflect levels potentially tradable within the next six months consistent with our medium-term outlook. Moreover they indicate what we regard as favorable levels to buy or sell currency pairs for both investment and hedging purposes. Based on our six month forecast we will continue to provide calculated projections for various time periods.
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