EU summit about Greece to capture the interest of investors and traders

Fundamental View

The main feature of yesterday's session was continued Greek headline risk with the most notable market reaction coming just after midday when a Europe source comment said that the Eurogroup could allow an extension to the Greek bailout programme. This comment in itself is nothing new and given the fact that the Greeks do not want a bailout extension it becomes even less meaningful at this stage. However, EURUSD rose 40 pips and the European stock index space took a bid off this. However, the following few hours saw these initial moves retrace but European equities did hang on to some gains and the S&P had a technical break higher just before the US close to post its highest close of 2015. This bullish finish to the US session was all the more surprising given that WTI crude prices slid over 5% ahead of today's DoE inventory numbers from the US which is expected to show a further increase in stock piles.

Today’s View

Today's session has been a very quiet one so far and this is expected to continue. There is nothing on the data calendar other than the DoE oil inventory numbers due for release at 15.30 GMT. The big events of the day are all political. We have an EU summit which will see the Greek bailout issue at the top of the agenda and indeed the only thing on the agenda. This does not start until after the European close, but there is potential for comments from Europe's leaders as they arrive for the meeting. But it is the post meeting soundbites that investors will be most interested in and these are not likely to come until much later on this evening. Investors want to get the latest on the potential for a deal to be struck between Greece and their Eurozone paymasters. Traders are not looking for a deal to be finalised tonight - far from it. If previous Eurozone bailout negotiations are anything to go by then realistically we shouldn't expect a deal until the very last moment at the end of February. Therefore, we expect markets to be disappointed to the outcome of today's meeting. The other political heavyweight meeting today is between Putin and Merkel in Minks as they try and broker yet another 'cease' fire in the Ukraine. Overall we expect a quiet session and we prefer a risk off bias ahead of tonight's Eurogroup meeting.