Why the Tokyo fix matters for yen crosses

[Amanhasnoname]

At 9:55am Tokyo time, a reference rate gets set that Japanese importers, exporters and funds use for settlement. Dollar-yen often sees flow into that window, particularly on the 5th, 10th, and other days when Japanese corporates settle trades.

Scalpers working USDJPY, EURJPY or GBPJPY in the Asian session sometimes notice a burst of one-sided pressure shortly before 10am Tokyo, followed by a pause or reversal. That's the fix doing its work.

It's not a trading system. Some days nothing happens, and the flow runs in different directions. But expecting the volatility is useful on its own, since it explains moves that seem to come from nowhere.

One practical note: during the fix, spreads on yen crosses can widen a little and price can gap between ticks. Entering just before it is usually a poor idea unless the plan has accounted for that.

Does the Tokyo fix show up in your Asian session results?