As the eurozone’s great experiment with negative interest rates continues, the dynamic of global capital flows has changed dramatically, responding to big shifts in the relationships between the world’s main currencies. While the US dollar is in much the same place relative to the yen as it was at the start of the year, the euro has depreciated by more than a 10th against the Japanese currency. This has confounded an army of forecasters who expected more yen weakness in light of the failure of Abenomics to stoke Japanese inflation. They also worried that Japan would be exporting deflation via a weaker currency to a eurozone that was struggling with deficient demand.

Mercifully we have all been spared a turn of events that would have been a recipe for much fiercer currency wars than we have experienced so far. The reason is that the attraction of the yen as a funding currency for carry trades has been completely undermined by the European Central Bank’s quantitative easing and all the other pressures that have contributed to negative eurozone bond yields.

The ECB and the Bank of Japan have between them pulled off the remarkable trick of making the bond market of a country where public sector debt reached 226 per