1. Greek Negotiations Not Getting Anywhere

EU finance ministers and private credit holders continue to be at odds in regards to the debt restructuring negotiations.

From Bloomberg: Euro governments sought to fill a deeper-than-expected hole in Greece's finances by saddling investors with a lower interest rate on exchanged bonds, setting up a confrontation in the runup to a Jan. 30 European Union summit.

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Finance chiefs refused to increase an offer of 130 billion euros in public funds for a second Greek program. Instead, they rebuffed investors' bid for an average 4 percent interest rate on new Greek bonds, seeking coupons below 3.5 percent for debt to be serviced until 2020 and below 4 percent over the 30 years of the next Greek package.

The extra cost to bondholders would be 10 billion euros or 20 billion euros - a sum too small to jeopardize a deal, said Carsten Brzeski, an economist at ING Group in Brussels.

From Fox Business: Dallara said that the level of the interest rate coupon and various legal issues remain hurdles to an agreement, which he said covers EUR200 billion in privately held debt. Asked whether his group would accept a coupon below 4%, as the IMF and Germany are understood to be demanding, Dallara declined comment.

2. Portugal May Need 2nd Bailout

Concerns that Portugal may need to ask for further aid, following the model of Greece, has increaesd risk aversion for EUR crosses.

From Wall Street Journal: Investors, economists and politicians are increasingly convinced Portugal will need a second bailout amid fears it won't be able to return to markets for financing next year.

While the Portuguese government's finances are taken care of for this year as long as it abides by its bailout agreement, Portugal must regain full access to capital markets next year to help repay EUR9 billion in debt falling due in September 2013.

And as in the case of Greece, the IMF may demand a fresh package if it becomes clear the country won't be able to return to market in a year's time. Given the current yields being demanded by investors on Portugal's bonds, economists fear that may become the case.

The program assumption that the government can begin issuing longer-termed bonds again in 2013 also looks problematic, the Institute of International Finance, which represents the private creditors in their talks with the Greek government, said in a report on Portugal.

3. Economic Data from Europe Surprises on Upside

Data on the manufacturing and services sectors was better than expected, showing that Euro-zone growth is not deteriorating to start the 1st quarter, but is instead stabilizing at lower levels. That is a positive as it means that the steps taken by the ECB seems to have stopped a slide in confidence which has created conditions for the composite PMI to expand.

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From Markit: The  Markit Eurozone PMI® Composite Output Index moved into positive territory for the first time in five months in January, according to the preliminary 'flash' reading which is based on around 85% of usual monthly replies. The index rose for the third month running, up from 48.3 in December to a five-month high of 50.4. That signalled a marginal increase in private sector economic activity.

Output rose at a robust pace in Germany, which saw the largest increase for seven months, and a modest expansion (the first growth for four months) was also reported in France. In contrast, output continued to fall across the rest of the region as a whole, dropping for the eighth successive month. However, the rate of contraction was the weakest for four months.

This gives hope that even if GDP turns negative in the 4th quarter, than the there is a chance that the 1st quarter shows low but positive growth.

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Nick Nasad is the Chief Market Analyst at FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.