Currency spikes at 4pm London are not evidence of manipulation
How the London fix works
The currency fix time of day can be volatile, in both the lead-up, during, and after. there is also much speculation that it is the subject of 'manipulation'.
Here is a piece from Bloomberg that discussed spikes in currency rates around 4pm London time for the WM/Reuters fix, which “fund managers and scholars say the patterns look like an attempt by currency dealers to manipulate the rates”.
And, on the other hand, here is a piece arguing that 'manipulation' claims are overblown.... it says “I’m always skeptical whenever someone tries to tell me that the fix is fixed” (amen to that …)
- The WM/Reuters fix is calculated by examining actual trades made over a one-minute period beginning 30 seconds before the top of the hour
- Traders try to push through as many trades as possible in the few moments leading up to the fix
- Price movements that happen just before the fix are often the result of everyone trying to squeeze through the door at the same time
As is so often the case, there is a bit of truth in both. Yes, there has been some manipulation at times, but it happens a lot less frequently than people imagine (just 'cause you got stopped out doesn't mean its manipulation, sorry).
At the risk of turning this article into a series of links, I strongly recommend this piece explaining how the fix works in the real world.
It happens a lot less than the media would have you believe.