Last week ended with quite a disappointment on Friday, when the data on personal spending and the unemployment rate came clearly weaker than expected, and PCE inflation has returned to the previous level – 0.1% MoM vs 0.2% prev.

Today, Australia celebrates holidays – their retail sales rose by 0.6% on a monthly basis (vs 0.3% forecast). In today’s calendar we do not have more important readings – maybe only PMI construction in the UK (which remains well above 60.0).

But it is not a macro calendar, which will add a tone to markets today. The end of last week brought further revelations on Banco Espirito Santo, which as serious financial problems. Press flips headers, allegedly Portugal decided to save the bank – the recovery fund will close in 4.5-6.6 billion euro range. Forexlive reported that BES will be divided into two parts – the good and the bad one. The “good” part will be capitalized with the guarantee fund. The “bad” bank will entail shareholders. BES client funds are insured and taxpayers will not add their own money to the whole process.

The VIX index, which is considered as a fear index, rose at the end of the week from the vicinity of 12 points to 17, while the USD/JPY closed the week with a good profit and AUD/JPY weekly close was around the opening. However it is worth to observe this area of market activity, in the face of possible profits realization (stock exchange, active risks). It is assumed that the value of the VIX above 20 points indicate potential troubles and risk off.

VIX Index | Source: Bloomberg

In weekly macro calendar we should focus mainly on:

1)PMI in services – Tuesday in China, Europe, UK and USA,

2) Employment data from Australia (Wednesday) and New Zealand (Tuesday),

3) GDP and production output in the UK (Wednesday),

4) European Central Bank and Bank of England meetings (Thursday),

5) Reserve Bank of Australia monetary policy statement and the Bank of Japan meeting (Friday).

Interestingly, we have four central banks in the weekly calendar – Credit Agricole analysts believe that all four will remain on their existing positions.

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