Forex Flash: Greece granted two-year extension to meet its fiscal targets – Deutsche Bank (Barcelona) - The European session recovery was led by headlines of Greece obtaining a two-year extension and Draghi's comments at the Bundestag. On the Greek story, finance minister Stournaras said in parliament yesterday that a deal had been reached following a late-night teleconference with troika chiefs on Tuesday (Ekathimerini).

According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “The deal reached with the troika includes a €13.5B austerity package together with a range of structural labor reforms.” In return Stournaras said that Greece would be granted a two-year extension to meet fiscal targets. However, both Reuters and Ekathimerini point to a number of outstanding hurdles including the necessary support of the government's coalition partners.

The IMF also said there are still some issues that remain outstanding (Dow Jones). In a speech to German lawmakers, Draghi reiterated his stance that the OMT will not lead to disguised financing of governments. He also said that the program will not compromise the ECB's independence and nor lead to inflation. The reaction was apparently positive with the CDU's budget spokesman Norbert Barthle saying "(Draghi's) answers were very convincing, and we can therefore give the message to German citizens that fears of inflation that have been expressed here and there are unfounded.”