This is how it usually works, and please try not to be too shocked if you hear of banks trying to manipulate the market
- Corporates put in their orders for transactions to be filled at the Fixing rate
- Banks collate these orders and let’s say there is a net interest to buy EUR/JPY at the fixing rate
- They obviously want to sell to their customers at the highest possible price so they try to drive the market higher into the Fix
- As soon as the Fixing is over, the energy falls out of the market and it pops back to where it was before
That’s why I could never understand why corporates traded in this manner, but some are presumably tied by their inhouse rules and have to trade at the Fixing rate.