Dollar Firm, But Cable Weakness Pronounced

The US dollar is firmer in the aftermath of this weekend's event, which inlcuded a loss by the ruling parties in France and Germany, Japanese continuing to struggle to contain radioactive leaks and increased unrest in Yemen and Syria.  Sterling, which reached a multi-month high last Tuesday near $1.64 is off nearly a nickle as intreest rate differentials and talk of insurance payout to Australia and New Zealand take a toll.    Some observers are highlighting Fed's Bullard comments about ending QEII early.  This seems to me to be an exercise in exageration as Bullard is not a voting member. 

The euro climbed back above above $1.4080 after gapping lower in Asia (to ~ $1.4028).  Support now seen near $1.4040.  April 7th rate hike by the ECB remains a key factor as is the fact that Spain continues to appear to have decoupled from the woes of the periphery.

Sterling gapped lower and after filling the gap sold off to $1.5937, the lows since late Jan.    While there is potential toward $1.5873, a retracement objective, it looks like sterling is already finding support in the European morning. 

The dollar is at the upper end of where it has traded since coordinated interevention and has been up to JPY81.85.  The JPY82.00 area is key.    I expect the dollar to come off from these levels. 

The Canadian dollar is holding firm with an nationalction now planned for May 2.    The market expects the election won't result in a significant shift in policies.  US dollar support is seen in the CAD0.9760-80 area.