Marc Ostwald, global strategist at ADM Investor Services International. said in an email that "as a point of historical note, there is no precedent for fresh general elections so quickly after the previous one".
The dollar was weaker around ¥112 in Tokyo trading on Monday, affected by the euro's slide against the Japanese currency after German Chancellor Angela Merkel reportedly failed to conclude talks on forming a coalition government.
"As chancellor. I will do everything to ensure that this country comes out well through this difficult time", she said. The center-right politician said that she was ready to lead Germany for four more years, but that she felt a majority government was necessary for stability in Germany and Europe.
Germany, Europe's largest economy and anchor of stability, is facing the prospect of months of political uncertainty after Chancellor Angela Merkel's conservatives were unable to form a coalition with two smaller parties, raising the likelihood of new elections.
An extended period of political limbo in Germany means a range of decisions on the national and EU level will be on hold - most notably on French President Emmanuel Macron's proposals to overhaul the eurozone.
She said she would stay on as acting Chancellor and would consult with President Frank-Walter Steinmeier on how to move forward, adding that a deal had been within reach.
Many analysts expect this to be a relatively calm week of trading, with U.S. markets closed for the Thanksgiving holiday on Thursday and with few major data releases. "Nothing would be worse than to get into a relationship about which we know that it will end in a dirty divorce", Kubicki said.
The Free Democrats (FDP), a pro-business party, withdrew suddenly from the coalition after more than a month of negotiating with Merkel's conservative bloc.
Nex Group fell sharply as it reported a fall in first-half profit amid challenging market conditions, while William Hill slipped despite the bookmaker saying it was on track to deliver on its 2018 expectations. Slideshow (7 Images) The SPD, which came second in the September election, said it had no wish to recreate its alliance with Merkel and that voters should be given a say. Both options seem less than ideal at the moment, as politicians fear that the far-right Alternative for German (AfD) party could secure more than its current 13 percent of votes.
Germany has been under leadership vaccum eversince the elections that concluded in September 24, resulted in a hung parliament.
His remarks appeared aimed at the FDP and the Social Democrats (SPD), who on Monday ruled out renewing their "grand coalition" with the conservatives.
Several hours ahead of Merkel's comments, President Steinmeier appeared to rule out snap elections for now, instead emphasizing the obligation each party had to the voters.
"I think it's an absolute strength of our democracy, our society, that we are capable of compromise - it's because of that that we have been such a stable and strong country in the past", Tauber said. Party chairman Christian Lindner said, "It's better not to govern, than to govern wrongly". They want to reinvigorate the German economy and shake up the status quo. "We are not afraid of repeat elections".
Merkel was meeting with Steinmeier Monday to discuss the crisis but planned talks with Dutch Prime Minister Mark Rutte were hastily cancelled.