The euro declined in the European market on Monday against a basket of global currencies, extending its losses for the fifth consecutive day against the US dollar, as investors focused on buying the US currency after the odds of a near-term US Federal Reserve interest rate cut retreated.

With inflation pressures easing on European Central Bank policymakers, the probability of at least one European rate cut this year has improved, and markets are awaiting more economic data from the eurozone to reprice those expectations.

Price overview

•Euro exchange rate today: The euro fell against the dollar by more than 0.1% to (1.1859$), from today’s opening level at (1.1873$), and recorded a session high at (1.1875$).

•The euro closed Friday’s trading down by less than 0.1% against the dollar, marking its fourth consecutive daily loss.

The US dollar

The dollar index rose on Monday by more than 0.1%, reflecting stronger US currency levels against a basket of major and minor currencies.

Strong US labor market data released last week reduced the likelihood of the Federal Reserve cutting US interest rates in March.

According to the CME FedWatch tool: pricing for keeping US interest rates unchanged at the March meeting currently stands at 90%, while pricing for a 25 basis point rate cut stands at 10%.

European interest rates

•Recent data released in Europe showed a slowdown in headline inflation levels during December, highlighting easing inflation pressures on the European Central Bank.

•Following that data, money markets raised pricing for a 25 basis point European Central Bank rate cut in February from 10% to 25%.

•Traders have adjusted their expectations from keeping European Central Bank rates unchanged throughout this year to at least one 25 basis point cut.

•To reprice the above probabilities, investors are awaiting more economic data from the eurozone on inflation, unemployment, and wages.

The Japanese yen declined in Asian trading on Monday at the start of the week against a basket of major and minor currencies, pulling back from a two-week high against the US dollar, due to correction and profit-taking activity, and after weaker-than-expected data on Japan’s economic growth in the final quarter of last year.

This decline comes ahead of an anticipated meeting between Japanese Prime Minister Sanae Takaichi and Bank of Japan Governor Kazuo Ueda to discuss the central bank’s policy direction and the outlook for interest rates.

Price Overview

• Japanese yen exchange rate today: The US dollar rose against the yen by 0.4% to ¥153.25, from today’s opening level at ¥152.66, and recorded a low of ¥152.58.

• The yen ended Friday’s session up by less than 0.1% against the dollar, marking its fifth consecutive daily gain, and recorded a two-week high at ¥152.27 in the previous session, supported by easing financial concerns in Japan.

• The Japanese yen gained 2.9% against the US dollar last week, marking its largest weekly gain since November 2024, amid a strong buying wave following the ruling party’s landslide victory in Japan.

Japanese Economy

Official data released today in Tokyo showed that the Japanese economy, the world’s fourth-largest economy, returned to growth “with difficulty,” posting figures that came in well below market expectations.

The Japanese economy grew by 0.1% in the fourth quarter of 2025, below expectations for 0.4% growth. However, this reading allowed Japan to avoid a technical recession — defined as two consecutive quarters of contraction — after a 0.7% contraction in the third quarter.

These weak figures represent the first serious economic test for the government of Sanae Takaichi following her sweeping election victory, and may strengthen the case for increased stimulus spending.

Takaichi – Ueda Meeting

The expected meeting between Prime Minister Sanae Takaichi and Bank of Japan Governor Kazuo Ueda is scheduled for today at 5:00 pm Tokyo time (08:00 GMT).

The meeting comes at a highly sensitive time for several reasons:

• First meeting after the landslide: It is their first bilateral meeting since Takaichi’s historic general election victory on February 8. Markets are watching whether she will pressure the central bank to maintain an accommodative monetary stance to support her stimulus plans.

• Weak growth data: The meeting comes hours after GDP data showed very modest growth in the final quarter of last year, potentially giving Takaichi additional justification to call for delaying any rate hike.

• Rate expectations: Markets are currently pricing roughly an 80% chance that the Bank of Japan will raise interest rates again by April, especially with inflation still above target.

• New appointments: Takaichi has the authority to fill two vacant seats on the central bank’s board this year, which could be a key topic in discussions with Ueda regarding the future path of monetary policy.

Japanese Interest Rates

• Money markets are currently pricing the probability of a quarter-point rate hike by the Bank of Japan at the March meeting at below 10%.

• To reprice those expectations, investors are awaiting more data on inflation, unemployment, and wages in Japan.

Artificial intelligence is often viewed as a driver of higher electricity use and, by extension, faster decarbonization. However, one of its most immediate effects may be the opposite of what many assume. The rapid expansion of AI infrastructure is increasing demand for reliable power, and this reality could reinforce the role of natural gas and other dispatchable energy sources for many years.

Investors focused on semiconductor and software valuations may be overlooking a fundamental constraint. AI runs on electricity, and power systems operate within physical and economic limits.

AI Is Driving a New Wave of Power Demand

The energy sector spent most of the past decade dealing with slow growth in electricity loads. That is now changing, in a way reminiscent of the sharp rise in oil demand — and then prices — in the early 2000s.

Training large language models and running advanced AI systems require massive computing resources. Hyperscale data centers are expanding rapidly, with developers requesting gigawatt-scale grid connections from utilities. In several regions, electricity demand forecasts have been revised upward after years of flat expectations.

The significance of this shift is that AI workloads generate continuous, high-density demand rather than intermittent usage. Data centers cannot simply shut down when power supply becomes constrained. Reliability becomes critical.

Reliability Needs Are Changing the Generation Mix

Wind and solar capacity continues to expand, but intermittent generation alone cannot meet the firm capacity needs of AI infrastructure without large-scale storage or backup generation.

Battery storage is improving, but long-duration storage remains expensive at scale. Nuclear projects face long development timelines and regulatory complexity. Transmission expansion is also lagging demand growth in many regions.

These constraints make dispatchable energy sources essential. Natural gas plants can ramp output quickly, run continuously, and be deployed faster than many alternatives. As a result, gas-fired generation is increasingly viewed as a practical solution for supporting AI-driven load growth.

This does not eliminate the role of renewables. In many markets, new renewable capacity is paired with gas generation to maintain grid stability. The key point is that AI-driven electrification of demand is likely to increase fossil fuel use in the near term.

Natural Gas May Be One of the Biggest AI Winners

Several factors support natural gas as a near-term beneficiary.

Construction timelines favor gas plants when demand rises quickly. Existing pipeline infrastructure lowers expansion barriers. For data center operators, reliability usually outweighs ideological preferences, since outages are extremely costly.

Utilities are also revising resource plans as load forecasts rise. This shift could drive higher investment in transmission networks, grid upgrades, and flexible generation assets.

The Decarbonization Story Is More Complex

A common narrative holds that AI accelerates the shift away from fossil fuels because it increases electrification. The reality is more nuanced.

If electricity demand grows faster than low-carbon capacity, fossil generation may rise in absolute terms even if renewables gain market share. Total emissions could increase while carbon intensity declines as cleaner sources take a larger share of supply.

Energy systems ultimately evolve based on engineering and economics, not only policy goals or market narratives.

What Investors May Be Missing

AI is often discussed as a technology story, but it is also an infrastructure story.

Rising power demand could benefit utilities investing in transmission and generation capacity. Natural gas producers and midstream infrastructure companies may see structural demand support from higher power-sector consumption. Suppliers tied to grid reliability equipment and gas turbines may also benefit.

Over the longer term, advances in nuclear, storage, or efficiency could change the trajectory. For now, the immediate response to a sharp rise in electricity demand is likely to rely on technologies that can be deployed quickly and reliably.

AI may reshape the economy in profound ways. One of its most underappreciated effects is that it could extend the importance of natural gas while the world builds the energy backbone needed for the next generation of computing.

Nickel prices rose during Friday trading, extending gains for a fifth consecutive session, after the world’s largest nickel mine in Indonesia received a much smaller production quota for this year, heightening supply concerns.

The benchmark three-month nickel contract on the London Metal Exchange touched $17,980 on Wednesday, its highest level since January 30.

French mining company Eramet said its PT Weda Bay Nickel project — a joint venture with China’s Tsingshan and Indonesia’s PT Antam — received an initial production quota of 12 million wet metric tons for 2026, down from 32 million wet metric tons in 2025, adding that it will apply for a quota increase review.

After a prolonged period of low prices, nickel has jumped about 18.6% over the past three months and reached its highest level in more than three years on January 25, after Indonesia — the world’s largest nickel ore producer — pledged to curb supply.

Nitesh Shah, commodities strategist at WisdomTree, said Indonesia “clearly recognizes its pricing power,” noting that its control of around 60% of global output makes it “more influential than OPEC in the oil market.” He added that Jakarta has realized it does not need to overproduce to secure strong revenues.

Despite that, the International Nickel Study Group expects a surplus of 261,000 tons this year, while an LME futures positioning report showed that a single participant holds a short position in the February contract representing between 20% and 29% of total open interest.

Other base metals were also supported by a weaker US dollar, which made dollar-denominated commodities more attractive to holders of other currencies.

In trading, spot nickel contracts were down 3.3% at $16.8 thousand per ton as of 16:26 GMT.