The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

The Yen got hammered again this week breaking through almost all technical support and looks to at least test last year’s lows, equivalent to an 85 dollar/yen.  It must first clear a key zone of resistance  at 81.50-82.25.

Lots of factors lining up against the Japanese currency, including the BoJ’s recent announcement it would fire up the printing press in the global “race to debase.”

Bloomberg BusinessWeek writes,

Japan’s status as an export superpower has taken a pummeling lately. First came news last month that the country had posted a $32 billion trade deficit for all of 2011, the first time that’s happened since 1980. Then, on Feb. 20, Tokyo announced a record shortfall for January of $18.5 billion, citing a strong yen that’s depressing exports and rising prices for energy imports. Japan may well record another yearly trade deficit in 2012. Now economists are worried that the nation’s current account could turn negative, raising questions about Japan’s ability to handle its $10 trillion-plus government debt load. That burden is equivalent to about 220 percent of Japan’s total annual economic output, the highest debt-to-gross domestic product ratio in the world. (That’s right: Greece’s debt level is a more manageable 164 percent of GDP.)

The government does want to see a weaker currency so no reason to panic until we see simultaneous moves of a falling currency, rising bond yields, and falling stocks.  Just make sure you panic before everyone else does!

Keep this one on your radar, folks.

St