According to polls, Ms Merkel is largely expected to win a fourth term as German Chancellor, a factor markets have priced in since March and visible in the euro's implied one-week volatility, which has plunged 170 basis points in September.

The market's calm is a stark contrast to the volatility that gripped equities and the euro just prior to the Dutch and French elections.

While populist party Alternative for Deutschland (AfD), with its anti-euro, anti-immigration message, is expected to secure between 8 and 13 per cent of the vote, it seems investors are pleased with Ms Merkel, and main opponent Martin Schulz's pro-euro, pro-trade messages.

Satisfactory stirrings of growth throughout the eurozone have prompted investors to begin snapping up European shares, with the DAX Index one of the top performing equity bourses this month. European equity funds have recorded inflows of more than $US30 billion ($37.6 billion) so far this year.

"The cataclysmic events are now behind us," says Jordan Cvetanovski, portfolio manager of the Pengana International Equities Fund.

"Even though it's starting from a low base, the European economy is expanding faster per capita than the United Kingdom and the United States and there's a broad-based upswing that will be hard to derail."

European manufacturing and service sector activity accelerated in the month of September, according to the PMIs and, should Ms Merkel take the top spot, the euro is expected to strengthen further.

"A victory for Merkel will mean a victory for the euro," says Kathy Lien, managing director of BK Asset Management.

Despite the positivity, the European Central Bank is not expected to raise interest rates for another two or three years, instead focusing on preparing the market for a smooth start to tapering its balance sheet expansion, which JP Morgan expects to be completed mid-2018.

"While rate adjustments will not come soon, sustained growth points to risks of an earlier shift in guidance," says Bruce Kasman, head of economic and policy research at JP Morgan.

Monetary policy is back on the global agenda, following the US Federal Reserve's decision last week to begin slowly winding back its enormous bond-buying program, partially credited with jump-starting growth in the US after the global financial crisis.

While the US central bank kept interest rates steady, it paved the way for another hike before the year is out and up to four possible hikes in 2018.

Markets are largely accepting of tightening monetary policy in the US, Canada and possibly the Bank of England, which has seen a lift in inflation courtesy of a weaker pound sterling.

The central bank hawkishness spilled over into the Australian market last week with the market changing its view that the Reserve Bank of Australia might raise interest rates as many as two times over the next 12 months.

While persistently low inflation is still front of mind for central banks, Reserve Bank governor Philip Lowe was optimistic in Perth, saying the Australian economy is on the path to a new post-mining growth phase, despite the challenges of weak wages growth and record-and-still-rising debt.

Despite strength in the US dollar last week, the Aussie has remained stubbornly around the US80?? mark, propped up by firm commodity prices and positive jobs data.