We are moving into a new paradigm in the FX market, one that could be substantially more volatile especially as we lead up to the G20 meeting later this week. Today the G7 released a statement specifically on the FX market. It reaffirmed the G7’s “commitment to market determined exchange rates” and reiterated its pledge not to “target exchange rates” in respect to domestic policy objectives. This sounded fairly neutral, and typical of the G7 – statements clouded by a veil of diplomacy. But then an extraordinary thing happened, something I have never seen in the years I have been involved in the FX market. A G7 official came out and said that the statement had been miss-interpreted and the G7 was, in fact, concerned about excessive yen moves and the Japanese currency will be the focus of the G20 at this week’s meeting in Moscow.