Eurozone Flash PMI Edge Higher, China's Contracts, SNB Defends 1.20, UK Sales Decline

SNB vows to defend 1.20 EUR/CHF, Eurozone Dec flash PMI improves, UK retail sales drop unexpectedly, Spanish bond auctions saw lower yield but also lower bid to cover ratio. Eurozone Nov CPI holds at 1.6%. There are 12 Premium Intermarket Insights traded from Wednesday night, along with key 3-in1 charts on cyclical deleverarging.

Eurozone Dec flash manuf PMI edged up to 46.9 from 46.4 while flash services PMI rose to 48.3 from November's 47.5. On the inflation front, Eurozone Nov CPI held at 3.0%, while core CPI held at 1.6%.

The SNB announced it would stick to the 1.20 EUR/CHF floor and defend it with "utmost determination" by buying foreign currency in unlimited quatities. SNB said Inflation will dip into negative territory due strong franc and worsening growth in Eurozone.

UK Nov retail sales fell 0.4%, vs expectations of a 0.2% decline and previous 1.0% increase. y/y rose 0.7% vs exp +0.4% and prev 1.1%.

Fitchs downgrade of five European banks including Credit Agricole was the latest in a line of blows to hit the single currency yesterday and the prognosis for optimism isnt likely to improve today with the release of the latest services and manufacturing PMI data from France, Germany and the Eurozone.

The ECB is also set to publish its monthly report for December while Mario Draghi is due to speak later this morning in Berlin.

Core consumer prices are also expected to show signs of stability back in the face of slowing economic activity remaining at 1.6%, the same as the previous month, while ordinary prices are expected to stay at 3%, above the ECBs target rate.

Spain auctions sold 3.15% in 5-year auctions at an average yield of 4.02% vs. previous 5.276%; 10 year auction average yield was 5.54% vs previous 5.43%.

CBI industrial orders due later in the day arent expected to encourage either with expectations of further deterioration to -20 from -19.

China slowdown fears continued to build after flash HSBC Manufacturing PMI for December came in at 49, slightly better than Novembers final 47.7, but still in contraction territory.