UK cost of living gap should narrow

Today's Highlights

Chinese economy slows less than expected

UK cost of living gap should narrow

Canadian interest rates set to stay on hold

FX Market Overview

I don't want to hang around with the people UN special rapporteur Rashida Manjoomet met when she came to Britain. She seems to have been steered towards sexist, misogynist and boorish people and judiciously steered away from us normal people. I haven't spoken to anyone who recognises her comments about Britain being the most 'in your face' sexist country in the world. She really needs to get out more. For goodness sake, where else in the world can a young woman just get pregnant and live an easy life on benefits for the rest of her days? Just ask Sinead Clarkson. I rest my case.

Aaaanyway, step one is complete. Inflation in the UK has dropped once again to just 1.6% year on year. That is the first step in finding out whether we are narrowing the income to expenditure gap. Step two comes this morning in the form of wages growth data. It is usually overshadowed by the unemployment figures but this time around, we may just see a rise above the level of inflation and that would be a fillip for the Chancellor in his battle with the opposition about the cost of living squeeze. Sterling is in reasonable form and will strengthen if the forecast are correct; especially if unemployment drops as well and that is a real possibility.

China's economy grew at 7.4% on the year to Q1. That was slower than the previous quarter but above the forecast of 7.3%. Traders and analysts seem relieved and the share prices in Asia and in early trade in Europe reflected that.

However, this didn't lift the value of the Australian and New Zealand Dollars which lost a little ground overnight. Some of that is a reflection of Sterling's renewed strength but the industrial production component of China's GDP data worried analysts and that affects exports from Australasia.

Today brings European inflation data. That is a concern because there is a feeling we will edge further towards deflation and that will force the European Central Bank to add further monetary stimulus to the Eurozone economy. The Sterling - Euro exchange rate is in stasis at the €1.21 level so it will need some sort of catalyst to break it out of that malaise and good UK data plus poor Eurozone inflation might be just the ticket.

We also get an interest rate decision from the Bank of Canada today. No one is expecting any movement on the 1.0% base rate but Canada has been rife with rumours of the threat of deflation as well so the comments from the central bank will be interesting.

Today's US data includes industrial production and a little housing market data. None of that is likely to be as strong an influence as the Chinese data or the rising tensions in Ukraine. As I write I am hearing reports of armoured vehicles being deployed in Ukraine to combat protestors and everyone is nervous about what the Russian response will be.

Away from all this market shenanigans, you may have missed this news report but the beautiful Bavarian city of Munich, home to beer festivals and BMW production, has created six 'Urban naked zones' so naturists can strip off in certain parks around the city. I've been to Munich and it was very cold, so I'm not sure how great the participation will be but good luck to all the nudists out there.