I had the same problem.
After some investigation, I found when steam escapes from the cap, it means the pressure release valve in the cap is doing what its supposed to do. The valve allows steam to escape when pressure in the machine builds too much. The cause may be an obstruction in the wand or hose mineral deposits build-up. The machine boils water, so mineral build-up is inevitable. Use vinegar to soak the reservoir occasionally to get rid of the build-up.
1. Turn off machine. Check the cap that its not damaged. If not, go to 2.
2. Remove the wand from the hose. Hold it tip downward, and fill with water. If no water comes out the tip or its slowly dripping out, than there is an obstruction in the tip. Use a straightened paper clip, and push it through the tip to clear an obstructin. Flush the wand. Repeat this procedure until water smoothly flows out. Test machine again. If not resolve, go to 3.
3. Remove wand. Check the end of the hose. Use paper-clip to clear any obstruction at the end.. Test machine without wand. If steam does not flow well, there is an obstruction in the hose somewhere. Dissolve the obstruction overnight with vinegar by using a syringe to inject vinegar into the end of the hose, and hang the hose end up. Rinse out reservoir and test machine.
Moses Chan, September 2007