Risk continues to remain attractive to investors who seem happy to add to their equity portfolios as they feel that a deal on Greek debt is imminent. 

As negotiation deadlines slipped once again the real last minute deadline gets closer.  In order to ratify any deal with bond holders in the Greek parliament and to get through the further austerity measures being demanded by the troika votes have to take place before 15th February, only a week away.  It comes as little wonder that negotiations have taken so long as all options have been discussed and the existing Greek administration is a mix of three different political parties all with their own ideas and ambitions in the coming months with Greek elections due in April.  Despite what some in the market think about a Greek default and exit from the euro, political resolve from the likes of France and Germany has never been stronger and now the pressure is really mounting on the Greek government as the troika is due to speak with not all three coalition leaders today, but each one individually.  This could be enough to push the deal making over the line and that’s what investors are thinking which is pushing indices higher.  Word on the street is that the private bond holders will take a 70% hit on their Greek bonds, but the other key variable is to pass the next round of austerity through the Greek parliament in the face of continued mounting opposition from the population. Today’s one on one meetings might just achieve the latter and for the bond holders they have to appreciate that they're lucky not to be seeing an outright 100% write down and default.

So if the deal is actually achieved, what does that mean for the likes of Portugal and Ireland?  Surely, they’ll be thinking if Greece can take such a big write down why can’t we? Thankfully Portugal and Ireland are very different cases to Greece and already have been having quite a bit more success in getting their houses in order, so the other bet that equity investors are putting on is that contagion will be averted.

So at the time of writing the FTSE has opened up a few points in the black above the 5900 level, yet clients continue to oppose the upward trend in the belief that the rally has to come to an end at some point.  The feeling is that as markets continue to creep higher they are just building themselves up for disappointment at some point and any correction when it does come will be even more severe.  For the bulls however the grind higher is only going to build and for now with the 5900 hurdle being overcome the major psychological 6000 level isn’t all that far away.

There's nothing to write home about on the economic data front and really the only thing worth monitoring here is the oil inventories due out later this afternoon.

On the currency front the euro’s recent rally seems to be gathering momentum as the Greece deadline looms and pressure mounts. The feeling that a deal is around the corner is helping lift the single currency and this morning EUR/USD is at 1.3280, building on its seven month high that it recorded yesterday.  A break through the 1.3200 level is quite significant and is a further blow to the bears who continue to be squeezed.  As shorts in the euro become less and less the closing of these positions only serves to give more momentum to the rally and soon these bears will probably turn into bulls if they haven’t already, possibly adding further strength.  For now the bear term support and resistance is seen at 1.3200, 1.3165 and 1.3290, 1.3325 respectively.

Gold enjoyed a strong bounce yesterday as it looks to be reversing recent weakness and turning what looked to be rather bearish near term signals back into bullish ones.  As yet another dip looks to have turned into a buying opportunity for the bulls the yellow brick is trading back at 1750 having reached a low at around 1710 yesterday.  Near term support and resistance are seen at 1735/30/25 and 1755/64/75 respectively.

Brent is also perky this morning as it puts on another 50 cents taking it to near the 117 level which is was above late yesterday.  This morning Brent is at 116.70 and traders will be keeping a keen eye on those inventory numbers later today.