• The euro snapped a two-day rising streak and edged lower on Monday after the German election results prompted some investors to lock profits into one of the most profitable currency trades of the year.
The euro slipped 0.4 percent to $1.1912 against the dollar on Monday but was higher against the Swiss franc and was broadly flat against the Japanese yen.
Merkel did win a fourth term in office on Sunday but will have to build an uneasy coalition to form a government after her conservatives haemorrhaged support in the face of a surge by the anti-immigration Alternative for Germany (AfD).
The German election results are not a game changer for markets with the outcome likely positive for German equities, Michael Strobaek, global chief investment officer at Credit Suisse said in a note to clients.
• Angela Merkel's conservative bloc will be the largest party in the next German parliament, but provisional election results point to a worse-than-expected majority for the German chancellor.
Merkel's center-right Christian Democratic Union (CDU) and its Bavarian sister-party the Christian Social Union (CSU) won 33 percent of the vote. It would make them the largest parliamentary group, but that is down from 41.5 percent in the last election in 2013 and lower than recent polling. It is also their worst result since 1949, according to Reuters.
Speaking after the exit polls, Merkel said her party had hoped for a better result at the federal election but was happy that it had achieved the main goals of the campaign. She vowed to win back voters from the nationalist Alternative for Germany (AfD) party.
The center-left Social Democrats (SPD), which are currently in a coalition with Merkel, slumped to 20.5 percent - a new post-war low. Party leader Martin Schulz said it was a "bitter day" for Germany's social democrats. He added that the result meant it was clear the party should go into opposition and he would seek re-election as party leader in December.
The far-right Alternative for Germany (AfD) finished third and will enter parliament for the first time with a 12.6 percent of the vote. Only founded in 2013, the AfD party will be the first nationalist, right-wing party to enter the German parliament since World War II.
• Japanese Prime Minister Shinzo Abe on Monday ordered his cabinet to compile new economic stimulus measures in a package worth around 2 trillion yen ($17.80 billion) by the end of the year.
Speaking at a meeting with his top advisory panel, Abe said the package should focus on subsidizing education, child-care costs, and on boosting corporate investments to improve productivity.
• Japanese Prime Minister Shinzo Abe was expected on Monday to announce a snap election for next month to take advantage of improved ratings and opposition disarray, despite criticism that he is creating a political vacuum amid worries over North Korea.
• Bank of Japan Governor Haruhiko Kuroda warned that escalating tensions in North Korea were among risks to an otherwise brightening global economic outlook, stressing that the central bank was closely watching the impact on markets and Japan’s economy.
• Japan’s government maintained its moderately optimistic view on the economy, signaling that a recovery is broadening and gathering strength even as inflation remains anemic.
• Japan and the United States are likely to hold their second economic dialogue on Oct. 16 in Washington, a source familiar with the issue told Reuters on Monday.
Reference: Reuters, CNBC
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