Q. Many times, we saw a currency rate run up when close to the 16:00 GMT, but at the last 10-15 minutes, the price start to slow and drop. How do we read this price action? Are there demands for the currency at the fixing and the dealer is hurry to complete the transactions? I guess I am trying to figure out what is the probability of the continuing move (or reverse) after the fixing
Also, is there a particular time, the dealers start to look at the fixing book and balance things out? perhaps 1 hour or half an hour before the fixing?
A. Unless it is month-end when fixing flows tend to be heaviest, they probably begin to look at the book in the last 15/20 minutes before the fix…Most banks try and pair their fixing orders with banks with the opposite order through a broker. If the market becomes one-sided, that’s when we hear about it and markets begin to move….
If ten minutes before the fix, if all the brokers are looking for sell orders in EUR to match off with their buy orders, EUR/USD is most likely gonna go up for a while…
Occasionally a big order comes in at the last minute and traders get caught without an offset and have to struggle to square up…those are the days we get the biggest fix-related moves…
