Yen Stabilization Signals Mask High Bar For Japan–U.S. Coordinated Intervention

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After two decades of flat electricity demand, artificial intelligence has appeared as both a massive opportunity and a potential crisis for the US power industry. The surge in energy consumption from AI and data centers dominated the conversation at the annual BloombergNEF summit in San Francisco, revealing deep concerns about cost, infrastructure, and policy.

The data center boom is already a powerful force in the American economy, influencing local elections in New Jersey, Virginia, and Georgia last November. Its growing impact is now expected to be a significant factor in this fall's congressional midterms.

Here are five key issues shaping the intersection of AI and the nation's power grid.

Who Foots the Bill for AI's Energy Boom?

As energy affordability becomes a major concern, data centers face growing pressure to cover the costs of their immense power needs without passing the burden onto the public.

"Consumers may end up holding the bag," warned Amory Lovins, co-founder and chairman emeritus of RMI.

Ryan Wiser, a senior scientist at Lawrence Berkeley National Laboratory, argued that since data centers are the primary driver of rising utility costs, "they also need to be the ones to cover that."

In response, President Donald Trump and a group of governors from the Northeast and Mid-Atlantic have proposed an emergency wholesale electricity auction. This plan would compel tech companies to fund the construction of new power plants, aiming to both secure the energy data centers need and control rising utility bills for everyone else.

The Nuclear Option: Clean Power on a Slow Timeline

Tech companies have been clear about their preferred energy source: nuclear power. Valued for its ability to provide clean, reliable, round-the-clock electricity, it has attracted major investment. Meta Platforms Inc. has made significant deals with nuclear startups, and Microsoft Corp. has spearheaded efforts to restart a closed power plant.

Despite this enthusiasm, the reality on the ground is stark. Not a single new small modular reactor (SMR) has been built in the US, and only one design has received approval from the US Nuclear Regulatory Commission. A traditional nuclear plant takes roughly a decade to bring online—a timeline completely out of sync with the rapid growth of AI.

The core challenge remains unchanged. The question, according to BNEF analyst Musfika Mishi, is whether reactors can "be built on time, on budget and actually be competitive with natural gas." Currently, nuclear energy in the US is three times more expensive than natural gas. While SMR developers promise to lower costs, it remains to be seen if they can deliver.

How Big is the AI Power Bubble?

Beyond the debate over which technology is best, a more fundamental uncertainty looms: just how much electricity will AI actually require?

Forecasts for data center demand vary dramatically. PJM Interconnection, the operator of the largest US grid, recently revised its 2027 summer forecast downward after analyzing connection requests more closely. However, the overall trend is one of explosive growth.

• BNEF projects US data center demand will reach around 400 terawatt-hours by 2030.

• Other forecasts are far more aggressive, with some predicting demand could exceed 1,000 terawatt-hours by the end of the decade.

Lovins cautioned investors to consider the significant financial risks of building a fleet of new natural-gas power plants based on these projections. He pointed to the possibility that data centers could become much more energy-efficient or that the AI boom itself could deflate.

"Demand uncertainty and financial risk rise deeply when artificial intelligence meets natural stupidity," Lovins said.

Conflicting Signals in US Energy Policy

The Trump administration's energy policy has been marked by contradictions. While the president has pushed for a data center boom that requires vast amounts of new energy, he has also made it more difficult to build wind power projects.

Simultaneously, the US withdrawal from multiple climate agreements has allowed China to extend its already dominant lead in clean technology. Former Energy Secretary Jennifer Granholm described this as a major problem.

"Our economic competitors like China are so happy that the US has pulled back," she stated.

A Look Ahead: Lessons from Past Policy Shifts

Reflecting on her time in the Biden administration, Granholm recalled overseeing the allocation of tens of billions of dollars in loans and grants for clean technologies like hydrogen and carbon removal. Much of that funding was later reversed or eliminated by the Trump administration.

Granholm believes Democrats should learn from this aggressive approach when pursuing their own clean energy agenda.

"The cancellation of all of these loans and grants was stunning to a lot of people who had worked on those because we thought we had commitments, we had obligations," she said. "Had we known that there would be such a slash-and-burn mentality about it, I think we would've done things differently."

Her advice to the next Democrat in the White House was simple: "Don't be afraid to break some eggs."

Oil prices edged lower on Tuesday, defying a major supply disruption as a massive winter storm swept across the United States, impacting both crude production and refinery operations.

Brent crude futures registered a 0.4% decline, falling 28 cents to US$65.31 a barrel by 0145 GMT. Similarly, US West Texas Intermediate (WTI) crude dropped 24 cents, or 0.4%, to trade at US$60.39 a barrel.

US Winter Storm Halts Oil Production

The price dip comes as a severe winter storm strained energy infrastructure across the US. According to analysts and traders, the extreme weather knocked out up to two million barrels of daily crude production over the weekend, accounting for roughly 15% of the nation's total output.

The freezing conditions also created significant operational issues for several refineries located along the US Gulf Coast. Daniel Hynes, an analyst at ANZ, noted that these disruptions have raised concerns about potential fuel supply shortages.

Global Supply Factors in Play

Beyond the immediate weather impact, traders are also watching geopolitical and policy developments that could influence the market.

Middle East Tensions Add Risk

Supply risks in the Middle East remain a key factor. According to two US officials, an American aircraft carrier and its supporting warships arrived in the region on Monday. This deployment expands President Donald Trump's military capabilities to either defend US forces or take potential action against Iran.

"Supply risks haven't totally evaporated," said Hynes, adding that "Tension in the Middle East persists after President Trump dispatched naval assets to the region."

OPEC+ Poised to Hold Production Steady

Meanwhile, key members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+) are expected to maintain their current pause on oil output increases for March.

Three OPEC+ delegates indicated that the decision is likely to be confirmed at a meeting on February 1. The group's stance is supported by rising oil prices, which have been partly driven by a recent drop in Kazakhstan's oil production.

The eight OPEC+ members participating in the meeting are:

• Saudi Arabia

• Russia

• UAE

• Kazakhstan

• Kuwait

• Iraq

• Algeria

• Oman

China's industrial sector posted its first annual profit increase in four years in 2025, signaling a potential stabilization for businesses in the $19 trillion economy. The turnaround was supported by a government-led effort to curb damaging price wars and a significant boom in exports that helped compensate for weaker consumption at home.

A Strong Finish to the Year

Data from the National Bureau of Statistics reveals a marked improvement in the final month of the year. In December, industrial firm profits climbed 5.3% compared to the same month a year prior, a sharp reversal from the 13.1% year-on-year decline recorded in November.

This late surge pushed the full-year profit growth for 2025 to 0.6%. This figure represents a slight acceleration from the 0.1% increase seen over the first 11 months of the year and marks the first time since 2021 that annual profits have risen.

Exports and Auto Sector Fuel Growth

The recovery was not evenly distributed, with specific industries and factors driving the positive results.

One of the most critical drivers was the auto industry, which ended 2025 with a 0.6% profit increase. This performance marks a significant turnaround from the 8% profit decline the sector experienced in 2024, largely buoyed by robust export performance.

More broadly, China's strategy of diversifying its export markets away from the United States helped cushion the economic blow from tariffs imposed by U.S. President Donald Trump, allowing for sustained overseas sales.

Performance by Ownership Type

An analysis of the data shows varied outcomes across different types of companies:

• Foreign Firms: Recorded a 4.2% gain in profit.

• Private-Sector Firms: Profits remained flat for the year.

• State-Owned Firms: Saw profits decline by 3.9%.

The official industrial profit data covers firms with a minimum annual revenue of 20 million yuan ($2.88 million) from their primary operations. The exchange rate used for conversion was $1 to 6.9542 Chinese yuan.

South Korea’s Finance Minister, Koo Yun-cheol, is set to urge lawmakers to fast-track a $350 billion U.S. investment bill following a threat from President Donald Trump to increase tariffs on South Korean automobiles.

The move comes just hours after Trump announced potential tariff hikes not only on cars but also on South Korean lumber and pharmaceuticals, citing the country's failure to ratify a trade agreement with Washington.

Trump Signals Higher Tariffs on Korean Imports

In a social media post, President Trump declared his intention to raise tariffs on a range of South Korean goods. He specifically flagged an increase on auto tariffs from 15% to 25%.

"South Korea's Legislature is not living up to its Deal with the United States," Trump wrote. He stated that because the legislature had not enacted their "Historic Trade Agreement," he was increasing tariffs on autos, lumber, and pharmaceuticals to 25%.

South Korea's Plan to Address US Concerns

In response, South Korea's Finance Ministry announced that Minister Koo Yun-cheol will meet with Lim Lee-ja, the head of the National Assembly's finance committee, to push for the bill's passage. The proposed legislation has been stalled in the committee since its submission in December.

"We are currently assessing the U.S. side's intentions," the finance ministry said in a statement. "We will communicate with the U.S. government, including by explaining the status of the bill's discussion in the National Assembly."

The ministry added that it would continue to actively consult with the National Assembly on the matter.

Automakers Tumble on Tariff News

The threat from Washington sent immediate ripples through South Korea's stock market. In morning trading, shares of Hyundai Motor fell by more than 2%, while Kia's stock price dropped by over 3%.

Key Points:

AMD Maintains Strength Near Record Highs

The stock of Advanced Micro Devices (AMD) has been a market leader and remains strong. It is hovering near prior highs around $267. AMD is a leading semiconductor firm specializing in high-performance CPUs, GPUs, and adaptive computer solutions for data centers and gaming. The company competes with Intel (INTC) and Nvidia (NVDA) with innovations like MI300 AI accelerators. In 2025, AMD stock advanced by 77%, and as of Monday's closing price, it was up by 17.3% year-to-date. Earnings are reported next week.

Weekly Chart Shows Bullish Structure After Breakout

AMD weekly chart showing that a long term base breakout attempt remains in progress. Source: TradingView as of Jan 26, 2026.

An attempt to further the advance in AMD stock has been underway following a new record high breakout to $267.08 in October. The first pullback culminated with a higher swing low of $194.28 and a seven-month consolidation bottom phase. During the related consolidation period trend support was recognized near the 20-week average. Last week's the bulls failed to breakout to a new record high as a top was hit at $266.96, very close to the prior high, before weakening on Monday.

Daily Chart Confirms Trend Strength and Channel Support

AMD daily chart showing a bounce off solid dynamic support. Source: TradingView as of Jan 26, 2026.

Following a pullback from last week's high, the bull structure in AMD shows a likely continuation into new highs. The daily chart confirms underlying strength with faster moving averages rising above the 50-day average recently. Support for the recent pullback was confirmed near the long-term 200-day average. Moreover, a rising channel outlines the price movement within the uptrend, showing the potential for higher prices as the top of the channel is a potential target. A bounce from the lower boundary of the channel improves the possibility of AMD eventually approaching the top boundary line.

Key Support Levels Define Near-Term Risk

Last week's low of $225.41 is considered the maximum downside for support to hold while maintaining a short-term bullish structure. It remains possible that AMD trades range-bound for a period before another breakout attempt. However, signs of strength following tests of key support levels may signal the potential for a renewed advance toward the $267.08 high.

Fibonacci Levels Highlight Deeper Support Zone

The 38.2% Fibonacci retracement of the prior advance is located at $241.30, while the rising 10-day average is currently near $236. A deeper pullback would bring the 50% retracement into focus at $233.48, which closely aligns with the top of a seven-week consolidation range near $234.02, reinforcing that zone as an important area of technical support.

Source: FX Empire