A ray light in Greece was seen as the Greek Prime Minister announced that 'discussions between the Greek government and the Troika were successfully completed'. Greece and the EU/IMF/ECB troika appeared to have agreed a package of austerity measures and economic reforms for tapping the new tranche of rescue funding. The package is scheduled to be voted in the Greek Parliament on Sunday. The agreement will be discussed at the Eurzone finance ministers meeting to be held in Brussels and then be voted on by the EU Parliament. The market took a breath as Greece is expected to get the money for repayment of its debt due March 20 and as the PSI deal will probably be concluded soon. However, implementation is always a bigger issue.
The ECB left the main refinancing rate unchanged at 1% and President Draghi said that no change in current or prospective rates was discussed during the meeting. Concerning economic outlook, Draghi noted that 'a stream of both surveys and hard data seem to point to a stabilization of the economy at a low level' and expected the economy will recover gradually during 2012 although the outlook was 'subject to downside risks'. In the policy statement, the term 'substantial' was removed when describing 'downside risks to the economic outlook'. Yet, Draghi indicated that besides risks from internal developments in Europe, there are 'possible adverse developments in the global economy, higher than assumed increases in commodity prices, protectionist pressures, and the potential for a disorderly correction of global imbalances'. Separately, the BOE increased its asset purchase buying by +50B pound to 325B pound. This was widely anticipated by the market.
Concerning oil news, OPEC lowered its 2012 demand forecast, in contrast to DOE/EIA's upgrades. The cartel controlling 40% of the world's oil now expects demand to reach 88.76M bpd, down from last month's projection of 88.90M bpd but up +0.94M bpd from last year. the downgrade was due to 'waning OECD economies are negatively affecting the oil market and imposing a considerable range of uncertainty over the short term'.
On the macro front, China reported widening in trade surplus in January. The surplus increased to $ 27.3B from $16.52 B in December. Exports slipped -0.5% in January from a year earlier, down from a +13.4% rise in December. Imports dropped -15.3% from a year earlier, down from a +11.8% gain in December. The decline in trade in January was a result of Lunar New Holiday. The US's trade deficit probably increased to $48.2B in December from $47.8B a month ago. Separately, University of Michigan Confidence Index might have slipped -1 point to 74 in February.