We have not seen the end of the Yen debasement by any stretch of one’s imagination.  The Japanese monetary dumping ground has been in free fall since markets opened Sunday night and the USDJPY pair is now comfortably over 99 and headed to 100 easily this week.  The U.S. bond market has given back more than half of its gains since the spike on Friday morning sent capital fleeing into treasuries after horrific employment numbers, but the current trend in U.S. Bond prices it definitely up given the extreme weakness in the Yen.

Not only are U.S. bond prices up but they are up all across Europe as well and this is causing strength in the EURUSD despite the obvious fear within the Euro-zone to go along with the horrible economic conditions.  I contend, however, that at this point in time, an energy importer like Europe wants to see a strong Euro as the path to economic rebirth in the periphery is not the classic mercantilist drive to maximize exports but rather the importation of cheap energy to rebuild domestic production and demand.  The Euro price of Brent crude is at a 2 year low trading today at €80.54 per barrel.

All last year during both Brent and Euro weakness the price never dropped below €82 per barrel.  If Brent prices rally from here it will be along with Gold and likely the Euro as demand for European sovereign debt of high credit worthiness will be in high demand now that JGB’s have been completely destroyed by the Bank of Japan’s latest attack in the currency war.