An employee prepares to move stacks of Mexican pesos notes to a packaging machine at the Banco de Mexico printing factory in Mexico City. Analysts saw the Mexican peso as the biggest star this year, expecting it to gain 9.3% against the dollar.

Bloomberg
Santiago

For forecasters of foreign-exchange rates, 2015 was a horrible year.
Strategists surveyed by Bloomberg were, on average, 11 percentage points off in their predictions this year for the 16 most-traded global currencies, the worst performance in data going back to 2010. Analysts saw the Mexican peso as the biggest star this year, expecting it to gain 9.3% against the dollar. It weakened 13%. They predicted a modest climb for the Canadian dollar, which actually tumbled 17%.
Two main culprits upended currency estimates in 2015: the plunge in commodity prices to a 16-year low and the slump in emerging markets that brought down growth for developing nations to the slowest since the financial crisis of 2009. The Federal Reserve also boosted the dollar by starting its first cycle of interest-rate increases in nine years.
“For the last few years, economists have consistently been optimistic on global growth and emerging-market growth only to get disappointed,” said Bernd Berg, an emerging-markets strategist in London at Societe Generale SA, which was more accurate than most on Brazil’s real but got Colombia’s peso completely wrong.
“Commodity prices had already fallen significantly in 2014, then stabilized, so the majority of people expected commodities to remain stable in 2015. That obviously didn’t happen.”
Currency-fund managers also had a poor year. The Parker Global Currency Manager Index of top funds has fallen 2.2% in 2015, on course for its worst year since 2011.
Worldwide, forecasters did fairly well on their two most bearish predictions for 2015.
Their median prediction was for an 82% drop in Venezuela bolivar, in line with the decline seen in the black market, according to dolartoday.com.
 (The currency was unchanged in the official market that almost no one has access to.) The Argentine peso was predicted to weaken 30%. It’s down 35% after a devaluation December 17 as newly elected President Mauricio Macri fulfilled a pledge to let the currency float freely.
But in most cases, currency forecasters were too bullish because commodity analysts were wrong about the trajectory of major raw materials. At the end of 2014, the median estimate was that West Texas Intermediate crude would rise about 30% to $70 a barrel. In fact, it’s trading at close to half that and analysts don’t expect it to return to $70 in the next four years. Commodity forecasters were too optimistic on copper too. The median prediction was for a 6.4% to $6,700 a ton. It’s at $4,665.
The slump in commodities dented growth in developing nations. The median prediction now is for gross domestic product to rise 4% this year, the slowest pace since 2009.
While the biggest swings may have been in emerging markets, among G10 currencies - where more than 90% of transactions take place - predictions weren’t great either. The much-anticipated Federal Reserve hiking cycle and the divergence of policy with the European Central Bank pushed the euro down four times more than the median estimate.
Among the most developed countries, analysts had forecast currencies linked to commodities would be the best performers, including the Canadian dollar and the Norwegian krone. They were wrong. Analysts had predicted the krone would gain 2.9%. It lost 15%.
“Where the market was caught was on the scale of the commodity price move,” said Daragh Maher, the head of US foreign-exchange strategy at HSBC Holdings. “People expected weak commodity prices, but not the scale of the capitulation we’ve seen.”
The accuracy of next year’s forecasts once again depends on commodity currencies. Analysts surveyed by Bloomberg expect the New Zealand dollar to lead global gains against the dollar, with a call for 9.8% appreciation. The Australian dollar and the Colombian peso take up the next two places on the chart.
Bears are once again focused on Argentina’s peso, expecting the currency to lose 11% of its value. Analysts see a 12% drop in Ukraine’s hryvnia and a 7.3% decline in Indonesia’s rupiah.
The rise of the US dollar, which has strengthened 23% since the end of June last year, is coming to an end, argues Jan Dehn, head of research at Ashmore Group.
Traders have priced in faster economic growth, which now looks less certain as the Fed raises rates. In fact, the dollar has strengthened so much that there is a risk of a recession in the US, Dehn said, a view shared by Jeffrey Gundlach of DoubleLine Capital.