This morning the financial world was briefly abuzz over a strange (mis)communication from the G7. Earlier, the G7 released a statement on currency manipulation that was initially read as pretty boring – it was a general statement to the effect that manipulation is bad and markets should determine exchange rates. Not very exciting.

That is, until a G7 representative issued a clarification – that statement WAS intended to signal concern over Japan’s efforts to devalue the Yen, and they plan to make the Yen a focus of the upcoming G20 meeting. The result:

Chart courtesy Finviz.com. Disclaimer: past performance is not necessarily indicative of future results.

A spike in the Yen as the news sent traders scrambling. But this is why we’re such fans of systematic trend following – on a longer time frame, it was still just a blip:

Chart courtesy Finviz.com. Disclaimer: past performance is not necessarily indicative of future results.

No one can predict when a G7 statement is going to be vaguely worded and subject to “clarification,” no more than anyone can predict how low the Yen will go before all is said and done. And that’s why the managed futures approach – getting on board with trends that develop and waiting for your model to signal an exit – remains our favorite way to approach these markets. Maybe Japan will be pressured to end its monetary easing efforts, and we’ll see the trend come to an end… or we might not. But trend following programs won’t be scrambling to unravel the nuances of G7 statements to find out- they’re content to let the computer models and price action do the deciding, and ignore the day-to-day noise. Days like today remind us why.