May 26 (Fri) FX Deal Report and Fixing Trade
Everyone, thank you for your hard work this week as well.
How did the results of your deals turn out?
Yesterday morning, we were able to long and short USD/JPY through a target for the TTS/TTB by the予定? (Note: The original text seems to say "予定通り" meaning as planned. I'll translate accordingly.)
The yesterday's fixing chart was a typical fixing chart, and it was a clean chart.
Here’s a quick recap for blog readers as well.
First, what is the fixing (TTS/TTB) anyway?
Today, I’ll talk a little about fixing (TTS/TTB).
First of all, fixing (TTM) is the mid-rate reference used by banks and other financial institutions for foreign exchange transactions with customers, between TTS and TTB.
If you’re trading FX, you probably know that exchange rates are constantly changing.
To avoid the hassle of updating the rate with every tick, a fixing system was created to determine the day’s rate at a certain time.
The time when this fixing is determined is 9:55 Japan Time. The rate of Mitsubishi UFJ Financial Group (MUFG) is the main benchmark.
The transaction rate determined at fixing is applied for that day unless there is a large exchange rate fluctuation that day.
If the fixing moves by 1 yen or more, fixing publication may be halted and a new fixing may be determined.
And toward this fixing, a phenomenon called fixing shortfalls can occur.
In Japanese import companies, payments to trading partners are often settled in dollars, and on settlement days (the 5th, 10th, and days ending with "go" such as Gotō-nichi), yen is exchanged for dollars.
Therefore, on Gotō days, financial institutions may be short of dollars. This is called "fixing shortfall," and financial institutions buy dollars to resolve it.
As a result, the dollar is bought, and USD/JPY tends to move toward a weaker yen. Since the USD/JPY has historically trended toward yen strength, exporters preemptively hedge by arranging foreign exchange with financial institutions.
Therefore, financial institutions often find themselves short on dollars to deliver to exporters, so they need to procure dollars in the market. So, generally, there is often a dollar shortage before fixing.
However, during the time up to 9:55 for buying in fixing, mega-banks like MUFG and Mizuho tend to sell yen and buy dollars, while institutions such as Norinchukin Bank and life insurer groups tend to buy yen and sell dollars, so even on Gotō days or before long weekends, fixing does not necessarily rise to 9:55 100%.
For details on fixing trades, open an account with Monex Securities or Dukascopy Japan and you’ll receive a “candy bar” fixing-trading gadget as a bonus!
● Monex FX offers the “Gara-kei Fixing Trader” report as a gift
● Collaboration between Dukascopy Japan and a classic mobile device! (Note: This line references a collaboration with the Swiss Banking Group and a mobile device)
If you’d like, go ahead and open an account and trade to get it.
Well, during NY time, work wasn’t finished, so I took a break between tasks to take a long position in USD/JPY and a short in GBP/USD, and I took profits on the latter.
Thank you all for another week of hard work.
Have a great weekend.
＝＝＝＝＝＝＝＝= Gara-kei Trader (Hayato Igarashi) ＝＝＝＝＝＝＝＝
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