The pound was the top performer while the yen lagged on Monday.
The GBP/JPY pair is a big pip mover and was a post-crisis risk appetite barometer. It still has some of those qualities and climbed a full cent in a quiet market Monday but country dynamics are the dominant theme now with Brexit and BOJ policy driving the pair.
Lately we've been waiting for Article 50 and a BOJ hint on what's next so technicals have taken over. On Friday, the pair tested the uptrend from the January lows and today it held in another sign of indecision. It's now traded close to current levels for 10 weeks but like all the consolidation in current markets, it's due for a break.
Naturally politics will be a driver but looking through many of the charts including this one, inevitable tests of key trendlines will hit before month-end. GBP/JPY is consolidating from an uptrend so the bias may be to continue higher but it will be tough to sustain a single direction until the political and economic dust clears.
What makes the pound and especially intriguing trade is that USD/JPY and EUR/GBP are similarly locked in consolidation moves as we count down to Article 50. But with the declaration all but assured, why is the market in such suspense? There is no easy answer.
Turning to the economic calendar, both highlights will be released at 0030 GMT starting with the Japan Nikkei flash manufacturing PMI. It's not likely to be a market mover and the prior reading was 52.7. At the same time, the Feb RBA monetary policy meeting minutes are due. The statement was upbeat and that kicked off the latest round of AUD strength so the details are likely to have an impact. AUD/USD was up 20 pips on Monday to 0.7684. The 0.7700 level has been a tough area to crack. Late last week, the pair rose up to 0.7732 only to fade back below the big figure.
The US returns from holiday on Tuesday, so expect markets to ramp up.