The key factor surrounding G7 will be whether they are willing to back up rhetoric with actual intervention if the US currency continues to weaken.

At the G7 meetings late on Friday, officials announced a changed stance on currencies. The statement referred to the fact that members were concerned by recent exchange rate movements as they had potentially negative implications for economic and financial stability. The dollar was not mentioned specifically, but this was the clear target for the statement.

The evidence suggests that the Euro-zone officials were particularly keen on the change in rhetoric which was the first significant change since 2004. There were, however, also reports that protracted negotiations were required to agree the statement with the US and UK representatives reluctant to sanction the change.

The key factor now, therefore, will be whether there will be any action to back up the more aggressive verbal stance if the dollar continues to weaken. If markets suspect that more aggressive action will not be forthcoming, then dollar selling is liable to persist