If I were a Japanese policymaker, this chart would make me very nervous | investingLive

This chart shows the whole history of the euro, since its inception. It’s charted against the yen and just now touched a fresh all-time high at 180.01.

We’re used to thinking of the euro as something of a basketcase because of the dysfuction in eurozone policymaking, particularly at the political level but in these terms, it flips the script.

I think there are to structural things to think about with this chart:

1. The euro is structurally protected from government overspending in a way that no other currency is. Yes, they are trying to find ways to mutualize more debt but the tide on that kind of thinking is likely changing. That makes the euro a great reserve currency, despite the lack of dynamism in the eurozone economy.
2. Japanese debt and demographics are brutal, and perhaps fatal to the yen.

Now these things unfold very slowly but it can end up in an Ernest Hemingway situation, where bankruptcy happens slowly, then quickly. This chart makes me worry about that.

There is a clear series of lower lows and higher highs on the monthly chart. There was also something of a top at 170 that’s clearly broken now and a new Japanese PM that’s talking about more stimulus and repressing rates via the BOJ. That’s not a pretty picture and no amount of intervention is going to stop it.

It’s good news if you’re a Japanese exporter but in a world of AI and robotics, what will Japan have to sell? Moreover, all this is happening with commodity prices at fairly low levels, particularly energy. If that reverses, then Japan’s trade position is in a world of hurt.