LONDON (Reuters) - Hungary's Viktor Orban will get a warmer reception from Vladimir Putin in Moscow today than he did at last week's European Parliament session, which voted to censure his government for putting democracy at risk.
They will no doubt talk energy, with Hungary’s current gas import deal with Russia expiring the year after next; and trade, with Budapest in favour of dropping international sanctions against Moscow.
Separately, officials for Poland - Hungary’s main ally in its stand-off against the European Union - will face a grilling in Brussels by other EU states over Warsaw’s plans to overhaul the Polish judiciary, a move critics believe will undermine its independence from politics.
You wouldn’t know it, judging by the almost total lack of media interest in the event, but the UK’s main centrist party is holding its party conference this week.
As the only mainstream party to clearly state it wants to stop Brexit, the Liberal Democrats should at least be in favour with Remainer voters. Instead, they can barely muster around 10 percent in surveys. Leader Vince Cable, who some in the party blame for its lacklustre showing, is due to address the gathering today.
The other Brexit news event is EU negotiator Michel Barnier's report back to EU capitals before this week's Salzburg summit, which could well generate fresh leaks on the progress in talks.
It could be crunch day in the long-running saga around the head of Germany's surveillance agency, who stands accused of having far-right sympathies.
Angela Merkel will hold talks with other coalition leaders on the fate of Hans-Georg Maassen, who played down video footage of far-right protesters chasing migrants during a recent flare-up of ethnic tensions in eastern Germany.
The left-wing SPD want him to go, but Maassen has support from her Bavarian CSU partners. Whichever way she leans, it could create trouble within her government.
MARKETS AT 0655 GMT
The market response to U.S. President Trump’s decision to go ahead next week with collecting 10 percent tariffs on another $200 billion of Chinese goods, ratcheting up to 25 percent in January, has had the unusual impact of hitting U.S. stocks, Treasuries and the dollar while stirring a rally in Chinese equities and the yuan.
For months, each escalation of Washington’s trade war with Beijing has hit Shanghai stocks hardest and seen offsetting weakness in the yuan. But as Chinese retaliation is now awaited amid reports of top-level meetings there today and expectations Beijing will pull out of any proposed new trade talks, Wall Street stocks and tech titans such as Apple have taken at least some of the heat.
The S&P500 lost more than 0.5 percent to clock its biggest loss in over a month late Monday after Trump’s announcement and stock futures were flat overnight.
Ten-year U.S. Treasury yields topped 3 percent again first thing Tuesday after balking at levels above there yesterday, with jitters about what China may do next adding to more general nerves ahead of next week’s Fed meeting.
But the dollar retreat was most unusual, with the dollar’s DXY index briefly touching its lowest level since July earlier despite gains against the yen as Japanese markets returned from Monday’s holiday there.
Significantly, China’s offshore yuan rallied from more than three-week lows overnight to end stronger on the day against the dollar, with Shanghai stocks jumping almost 2 percent and Hong Kong up 0.7 percent.
Other Asia markets were more mixed, with Japan’s Nikkei up more than 1 percent as it played catchup to Monday’s moves. European stock futures were marked down 0.3 percent before the open, with the euro probing back above $1.17 against the generally weaker dollar.
Emerging-market currencies mostly held the line, although Turkey’s lira fell again back to levels seen the day before last week’s 625-basis-point interest rate rise to 24 percent.
In a follow-up measure on Tuesday, Turkey’s central bank raised the rates paid on lira reserves held at the bank to 13 percent from 7 percent to stem further domestic switching into dollars.
The lira’s latest move came on Monday after President Tayyip Erdogan was reported as saying authorities should look into members of the main opposition Republican People's Party over its 28 percent stake in Isbank.
Italian government bond yields edged higher again on Tuesday as tensions between top government officials over Italy’s 2019 budget re-emerged after Monday’s top-level government meeting and reports of a likely budget deficit forecast above 2 percent – higher than some weekend reports but still below EU limits.
Sterling slipped back from Monday’s highs, which were hit on optimism over a potential breakthrough on a post-Brexit solution for customs across the Irish border.
— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —