Dollar Mixed on Monday

The dollar is mostly firmer, but without much momentum as the market awaits fruther developments. 

The euro recovered from the dip below $1.4050, but ran out of steam near $1.4150, which was previously support.    The European finance ministers meeting begins shortly, and approval of Portugal's package may be the only concrete action that emerges.  An adjustment to Ireland's package and an extension of Greece's will have to wait until at least next month, it seems.   A break of $1.4150 would suggest a move toward $1.4200-25, but the $1.4300-50 may be a more critical area.

Sterling is lower, albeit marginally.  It has fallen four consecutive sessions coming into today.   Initial support at Friday's low just below $1.6150 remains intact and it may in the North American session today ahead of tomorrow's CPI report. 

The yen is little changed.  The unexpected strength in March machinery orders (+2.9%) may be a bit of a fluke.  It could be when the bulk of the data was collected.  Meanwhile the economic impact of the energy disruption may intensifiy as electricity supply already down 20% since March 11 will fall further in the coming weeks according to press reports.  And now talk about forgiveness of TEPCO debt is seen as a potential risk to the credit ratings of some Japanese fnancial institutions. 

Global equity markets remain under pressure.  The MSCI Asia-Pacific Index is down for the third consecutive session and is now at its lowest level since the end of March.  MSCI emerging markets index is at 7 week lows.   European shares are broadly lower as well.  

Ironically, the rally in commodity prices was supposed to be a headwind on growth, but since the commodities have fallen--perhaps in part sparked by margin increases, equities have traded heavily as well. 

The approaching US debt limit will get the media's attention, but investors seem to be focused elsewhere,   US Treasury coupon yields ae near recent lows and there is little sign of anxiety about the US creditworthiness or debt ceiling.  The 2-year US-German spread is near 126 bp today, the widest since May 4.