US stock markets and the European single currency both received support on the day following speculation that a resolution to the Greek debt fiasco may be at hand.  The sentiment is helping the Dow Jones Industrial Average to gain slightly to 12,926.20 – less than 80 points under 13,000.  This level is key as the benchmark index hasn’t traded above 13,000 since 2008.  The European currency is additionally higher on the session, rising to 1.3154 – or up 0.2% on the session.

Following a conference call with Italian Prime Minister Mario Monti and interim Greek Prime Minister Lucas Papademos, German Chancellor Angela Merkel noted her confidence that European finance leaders will be able to come to an agreement on February 20th.  The three leaders spoke through a conference call – where Papademos assured both major European Union leaders that the Greek government remains committed to proposals outlined in the measure that was submitted in the early hours on Monday.

Canceling a meeting set for earlier this week, European leaders rescheduled their summit to Monday, in order to allow for more time to review the Greek fiscal proposal.  Other German officials, including Deputy Finance Minister Kampeter, have cited their confidence in the passing of the current Greek proposal – following a member country call that took place in midweek.  The call, which involved finance ministers among member countries, was held in order to discuss weights to lighten Greece’s debt load while implementing the current proposal of a debt swap.

With the 130 billion euro package likely to arrive as soon as next week, the likelihood of a Greek default is dwindling – allowing European bond yields to decline a bit along with credit default swap yields.  Markets are now confident that Greece will receive the necessary funds in order to make due on 14.6 billion euros in debt obligations coming due on March 20th.

The only risk event here remains, however, if European leaders will withhold a majority of the disbursement of funds till after the April elections in Greece.  Although the option really isn’t that feasible – given Greece’s debt schedule.  But, should European leaders still show a lack of confidence when it comes to the country on Monday, it may complicate the bailout process and reverse the euro-phoria currently emanating in the markets.

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