The Japanese yen rose broadly in Asian trading on Monday at the start of the week against a basket of major and secondary currencies, beginning to recover from a nearly two-week low against the US dollar amid renewed demand for safe-haven assets. The move comes as investors react to concerns surrounding Trump’s tariff actions following the historic US Supreme Court ruling.

With inflationary pressures easing on policymakers at the Bank of Japan, expectations for a Japanese interest rate hike have declined until at least September. Investors are now awaiting further key economic data from Japan to reassess those expectations.

Price Overview

The Japanese yen exchange rate today: the dollar fell against the yen by around 0.7% to 153.99 yen, down from Friday’s closing level of 155.03 yen, while recording an intraday high of 154.95 yen.

The yen ended Friday’s session down by less than 0.1% against the dollar, marking its third consecutive daily loss, and recorded a nearly two-week low of 155.64 yen, pressured by easing inflationary pressures in Japan.

The Japanese yen lost 1.6% against the US dollar last week, marking its second weekly decline within the past three weeks and its largest weekly loss since July 2025, due to reduced expectations for Japanese rate hikes, in addition to concerns linked to the expansionary economic policies of Japanese Prime Minister Sanae Takaichi.

Trump’s tariff moves

The US Supreme Court issued a historic ruling on Friday, February 20, 2026, invalidating the broad tariffs previously imposed by the Trump administration, ruling that the use of the International Emergency Economic Powers Act (IEEPA) to impose those tariffs exceeded the legal authority granted to the president.

In a swift response, Trump announced on Saturday, February 21, 2026, that global tariffs would be raised from 10% to 15%, set to take effect starting tomorrow, Tuesday, February 24, 2026.

This time, Trump relied on Section 122 of the Trade Act of 1974, a law that allows the president to impose temporary tariffs for up to 150 days to address balance-of-payments deficits without immediate congressional approval.

The Supreme Court ruling also raised major legal questions about whether companies that paid billions of dollars under the previous “unlawful” system could receive compensation, a process that may take years to resolve in court.

Japanese interest rates

Data released in Tokyo on Friday showed that Japan’s core inflation rate slowed in January to its lowest level in two years, easing inflationary pressures on the Bank of Japan.

Following that data, pricing for a quarter-point rate hike by the Bank of Japan at its March meeting fell from 10% to 3%.

Pricing for a quarter-point hike at the April meeting also declined from 50% to 30%.

According to the latest Reuters poll, the Bank of Japan may raise interest rates to 1% in September.

Investors are awaiting further data on inflation, unemployment, and wage levels in Japan to reprice those expectations.

Most cryptocurrencies rose during trading on Friday as markets welcomed the US Supreme Court’s decision to overturn Trump’s tariffs.

A majority of US Supreme Court justices ruled today that the tariffs imposed by Donald Trump under the International Emergency Economic Powers Act were unlawful, stating that the president does not have the authority to impose tariffs on imports.

In response, Trump announced that he intends to implement a global 10% tariff in addition to the tariffs not canceled by the court ruling, and said he would consider reimposing alternative tariffs based on other legislation.

Markets also absorbed US fourth-quarter gross domestic product data, which showed growth of 1.4%, significantly below expectations of 2.5%, according to a Dow Jones survey.

Aditya Bhave, Chief US Economist at Bank of America, said that growth would have reached around 2.5% to 2.6% if not for the impact of the government shutdown.

Inflation data also raised concerns, as the core personal consumption expenditures price index — the Federal Reserve’s preferred inflation measure — recorded an annual rate of 3% in December, in line with expectations but still well above the central bank’s 2% target.

Regarding Federal Reserve policy, markets continue to largely expect the first interest rate cut this year to come in June, according to the CME Group FedWatch tool.

Ethereum

In trading, Ethereum rose by 1.2% on CoinMarketCap as of 21:45 GMT to $1,971.8, although the cryptocurrency posted weekly losses of 3.9%.

The Canadian dollar posted a weekly decline against its US counterpart on Friday as investors assessed mixed domestic retail sales data and a landmark US Supreme Court ruling on tariffs.

The Canadian dollar, known as the “loonie,” fell by 0.1% to 1.3687 Canadian dollars per US dollar, or 73.06 US cents, after trading within a range of 1.3671 to 1.3710 during the session. Over the week, the currency declined by 0.5% as domestic data showed easing inflation pressures, while the US dollar recorded broad-based gains.

The US Supreme Court ruled to cancel the sweeping tariffs imposed by President Donald Trump, which had been enacted under the International Emergency Economic Powers Act (IEEPA), a law intended for use during national emergencies.

Claire Fan and Nathan Janzen, economists at RBC, said in a research note that the ruling is likely to have less impact on Canadian trade than on most other countries.

The economists explained that most Canadian exports were already exempt from tariffs imposed under the IEEPA, while product-specific tariff measures — which represented a larger issue for the Canadian economy — were unaffected by the court’s decision.

Canadian exports of lumber, steel, and aluminum, along with auto components that do not comply with the United States-Mexico-Canada Agreement, continue to face elevated US tariffs.

Data showed that Canadian retail sales fell by 0.4% month-on-month in December, led by weaker sales at motor vehicle and parts dealers. However, a preliminary estimate indicated a 1.5% rebound in January.

Shelly Kaushik, Chief Economist at BMO Capital Markets, said in a note that consumer spending remains resilient despite ongoing economic uncertainty.

Oil prices, one of Canada’s key exports, were little changed, slipping 0.1% to $66.39 per barrel as markets expected no US military action against Iran before next week.

Canadian government bond yields edged slightly lower across maturities. The yield on the 10-year bond fell by 1.4 basis points to 3.220%, after earlier touching its lowest level since December 1 at 3.199%.

The key question is: what happens when renewable energy is acknowledged as the superior technology for generating electricity? Essentially, we are witnessing a process of substitution — one commodity producer replacing another, with renewables displacing fossil fuels — which brings us to the issue of the “minimum viable scale” within this assumed energy transition.

“Minimum viable scale” refers to the minimum level of operation or throughput needed to keep a system functioning and economically viable. Imagine a toll road that charges all vehicles to fund maintenance and operations. If traffic falls sharply, revenues decline, maintenance budgets shrink, breakdowns begin, and eventual collapse or abandonment becomes likely. This closely resembles the older concept known as the “death spiral,” where a shrinking number of utility customers bears steadily rising costs. As low-cost renewables continue to displace fossil fuels from electricity generation, a similar dynamic could affect the structure of the fossil fuel industry. In the United States, there are two separate fossil fuel infrastructures: railcars and mines for coal, and drilling rigs and pipelines for natural gas. The concern around minimum viable scale is that if fossil fuel production falls low enough — as renewable penetration rises and coal and gas generators operate fewer hours — the industry may no longer generate sufficient revenue to sustain two competing infrastructures in a permanently shrinking market.

Coal plant operators in China are already adapting to the “new reality” of low-cost renewables. They are retrofitting their fleets so that plants originally built for baseload operation can run in more flexible cycles — operating intermittently with greater efficiency — because their output is increasingly displaced by cheaper renewables. These fossil fuel plants, once designed for baseload generation, must now operate more intermittently to remain economically viable. This may soon become the challenge elsewhere, but with an interesting twist. China has far smaller domestic gas reserves than the United States, so aligning coal generation with renewables makes sense. The United States, however, has two fossil fuels competing for power generation. As one movie shogun famously said: “Let them fight.”

At this point, the minimum viable scale issue becomes a problem for domestic energy producers. Renewables are “eating away” at conventional power output, and as in the toll road analogy, revenue may no longer be sufficient to support two parallel fossil fuel infrastructures for electricity generation. Coal power requires extensive mining operations and rail links, while gas plants rely on drilling, processing, and pipeline networks. In a weak pricing environment and a shrinking demand base, both may no longer be needed — at least not for electricity generation.

Our conclusion, which frankly surprised us, is that coal-fired electricity could experience a modest revival. A coal plant located “at the mine mouth” — where the plant sits literally beside an active mine — requires far less fuel infrastructure than a comparable gas-fired plant. It is also worth observing what is happening in electricity markets themselves. Renewables, in places such as Australia, are fully displacing fossil fuel electricity for increasingly long periods, with significant reductions in consumer prices. This reduces revenues for fossil fuel generation and associated infrastructure, as assets sit idle for longer and longer intervals. Fossil fuel generation will still be needed, especially in winter when days are shorter and wind output is often weak, but far fewer facilities will be required. We expect intense competition for shares of a rapidly shrinking market.

There are also two additional factors that could strengthen coal’s position as a boiler fuel even as the technology enters its later years. The first is storage: coal stockpiles sufficient for several months can be maintained next to power plants without concerns over delivery reliability or price volatility. The second is that gas well freeze-offs during winter represent a major reliability issue, repeatedly exposing serious system weaknesses. Every recent severe cold spell has highlighted these vulnerabilities. As dependence on fossil fuels for winter electricity generation increases, the relatively weaker performance of gas delivery systems may become more problematic. Gas has long been favored as a boiler fuel in new plants because it is cleaner and cheaper. However, the United States is now moving away from clean-air emissions standards for power plants. It would not be surprising if the current administration reclassified pollutants such as sulfur dioxide and nitrogen oxides — key emissions from coal combustion — as “freedom particles.” From a competitive standpoint, this would remove one of gas’s strongest advantages, effectively making coal “clean” as well. At that point, the gas industry’s primary argument is that it remains cheaper than coal. Yet with rising and more volatile gas prices driven by expanding US liquefied natural gas exports, even this claim is becoming vulnerable.

We previously wrote about the technological transition from the telegraph to the telephone (“What the fall of the telegraph says about fossil fuels,” February 11, 2026). Natural gas, at least in the electricity sector, has long been considered coal’s successor — the so-called “bridge fuel.” If renewables become dominant — as we believe they will — there will likely be neither the need nor the willingness to continue paying for the massive infrastructures required to support both gas and coal in electricity generation. This is where the minimum viable scale problem emerges. Coal plants tend to perform better than gas during winter conditions, and their fuel prices are less volatile. As coal and gas compete for a shrinking share of electricity generation, coal should not yet be ruled out.

The main conclusion is that fossil fuels, over the longer term, will not be widely needed for baseload electricity generation (as seen in China), and the large infrastructures tied to them may become economically unviable, even if they remain necessary to complement renewables. In other words, due to inconsistent energy policies, we may face the risk of a disorderly collapse in energy infrastructure caused by insufficient revenue.