LONDON (AFX) - Leading currencies were rangebound in early trade but with the yen showing continued signs of weakness amid the gloomy outlook for the Japanese economy, dealers said.
The Nikkei's small rise and the rejection of the no-confidence vote against Japanese premier Yoshiro Mori kept the yen from falling too far, they added.
But quite apart from the political problems facing the country, Japan's monetary policy and its inability to stamp out deflationary pressures are weighing on the yen, Steve Barrow, economist at Bear Sterns said.
"The political situation in itself will become important only if it will affect monetary policy," he added.
Elsewhere, the euro was a touch lower against the dollar with little news to spur movement on either side.
"This week's market focus will be on the U.S. February labour market report due on Friday. Other U.S. data should only be of secondary interest, similar to the euro zone data," Michael Klawitter, economist at West LB said.
"We stick to the view that in the absence of weak U.S. data it will be difficult for euro/dollar to advance much further," he said.
European services February PMI numbers were all weaker than in January, indicating a drop in the level of confidence but survey data have been consistently lower than the actual figures, Barrow at Bear Sterns said.
"In the end, expectations will have to rise to meet the actual data instead of actual data meeting the pessimistic expectations," he said.
The euro zone services sector purchasing managers' index fell to a seasonally adjusted 54.4 in February from 55.3 in January, while in Germany the same measure slipped to 51.2 from 53.2 in January.
The Swiss vote not to start immediate negotiations with the EU on membership had little impact on the Swiss franc given that the outcome of the referendum was widely expected, he added.