LONDON (Reuters) - "Banana republic", "capital of fascism" or even "remnant of Nazism" -- Turkey's President Tayyip Erdogan over the weekend led his ministers in an onslaught of criticism of the Netherlands for its move to prevent them from campaigning for Erdogan's forthcoming constitutional vote.
Meanwhile there were clashes on the street between police and angry Turkish demonstrators.
The row has brought relations between Ankara and the European Union to their lowest point for years and Turkey is threatening still unspecified “sanctions” against the Netherlands. Whether these materialise or not is another matter: the irony is that trade between the Netherlands and Turkey surged 20 percent over the past 5 years to more than 8 billion euros last year.
The other question is who benefits from this in the Netherlands' general election on Wednesday, where the anti-Islam party of Geert Wilders makes strong gains. PM Mark Rutte's government has been praised domestically for its tough stance on the issue, but this could also play into Wilders' hands.
Britain's Article 50 Brexit legislation returns to parliament's lower house, the House of Commons, for lawmakers to debate conditions attached to it by members of the unelected upper house. Once it has debated and voted on them, the legislation will then go back to the House of Lords for its approval. The Lords then has to decide whether to try and reinsert the conditions, or pass the bill without them. It does not want to be seen to be delaying Brexit so is expected to allow the bill to pass on Monday night.
That could allow Theresa May to announce the triggering of the article as early as tomorrow, when she is due to brief parliament on last week’s EU summit. If not, the consensus remains that she’ll aim to do it by the end of the week: some pundits however suggest she might skip Wednesday, the Ides of March anniversary of the assassination of Julius Caesar.
Meanwhile in France, presidential candidate Francois Fillon is trying to get his campaign back on track after the "Penelopegate" nepotism scandal by presenting his "project for France" at news conference this morning. However, Fillon's woes appeared to grow at the weekend with a media report that he had accepted two suits worth 13,000 euros bought by an anonymous benefactor at a chic Paris boutique.
Another pivotal week for world markets kicks off with the dollar on the defensive despite a near-certain interest rate rise from the U.S. Federal Reserve on Wednesday.
As Fed policymakers prepare to pull the trigger and futures markets move to price in three U.S. rate rises this year, the attention has switched to the European Central Bank and reports that some of its decision makers too have considered a timeline for lifting interest rates, possibly even before the wind down of its existing bond-buying programme. The reverberations from those reports on Friday have lifted euro/dollar above $1.07 for the first time in over a month. Clarity on the issue now falls back on ECB chief Mario Draghi who speaks at a conference in Frankfurt late today.
The dollar is also on the back foot ahead of this Friday’s G20 finance chiefs meeting in Baden-Baden in Germany, the first such meeting of the Trump presidency. There are some concerns in the market that the meeting will be a forum for U.S. Treasury Secretary Steve Mnuchin to rail against excessive dollar strength against the currencies of its major trading partners and reinsert language in the G20 statement about reducing major global trade imbalances.
Dollar slippage has helped take the heat off sterling, where the lower house of parliament is expected later on Monday to clear legislation allowing UK Prime Minister May to trigger Article 50 of the Lisbon Treaty on leaving the European Union later this week, in line with her target deadline. While that trigger will be no surprise, the attention will quickly switch to the detail of negotiations with the EU and also the status of Scotland’s bid to table another referendum on independence as a result.
Worries about an inventory overhang and the durability of the OPEC supply cut deal has seen oil prices continue to slip lower, meantime, with Brent crude briefly dipping below $51 before stabilizing earlier. Asia bourses have welcomed the softer dollar and oil price and Friday’s Wall St stock gains on the strong U.S. February employment report. Most major bourses there are up about 1 percent.
European stocks are expected to open flat to firmer on the higher euro and also in a week of tense politics as the Netherlands goes to the polls on Wednesday amid a likely strong showing for far right candidate Geert Wilders. German bund futures opened higher, after heavy losses on the ECB reports on Friday. Iceland’s crown and markets will also be watched as the government announced at the weekend it was lifting all remaining capital controls.
Editing by Dominic Evans