Central banks publish official figures for domestic interest rates, as well as spot currency rates for a few select countries (largest trading partners).
To prevent arbitrage, I "expect" that in the absence of any intraday shocks to the system, the central banks figures will (and the possibility of arbitrage), should keep intraday prices "in check" - that is within reason.
I do not trade forex actively myself, so I do not know if this inference from the fundamentals (pun unintended), is borne out in practise.
My question therefore is this:
In lieu of actual EOD data for forex market data, is it practical (i.e. sensible), to use bank official rates as a proxy for actual EOD spot currency rates?
This would obviously be flawed for intraday trading, but for lower frequency trading, I imagine that the series (official rates and market spot values), will be highly cointegrated - and therefore, the former can act as a proxy for the latter - am I correct?