Sentiment ended last week on a softer note as the possibility that the Fed would taper remained.
Fed president Bullard said that the FOMC decision last week was a close call and raised the possibility of the Fed unwinding asset purchases in October.
Markets on Friday were also nervous ahead of the German elections on the weekend.
Share markets in the US weakened with the Dow closing 1.2% lower and the S&P500 down 0.7%, while the Euro Stoxx lost 0.3%.
US treasuries rose (yields fell) as weaker risk appetite supported demand. The market is also continuing to adjust to the greater likelihood of a slower pace of tapering by the Federal Reserve.
The US dollar index was slightly higher after Bullard's comments. Meanwhile, the euro gained early this morning on news that Merkel was on track to win the German election.
The Australian dollar weakened in line with softer risk appetite and a stronger US dollar. Key event risk today will be the Chinese HSBC flash manufacturing PMI release.
The prospect of reduced stimulus from the Federal Reserve saw commodity prices weaken. Gold and other metal prices weakened.
Losses in oil prices however, were capped on easing geopolitical risks from Syria and Iran.
There was no domestic data released on Friday.
Eurozone consumer confidence improved for the tenth consecutive month, rising from -15.6 to -14.9 in the advanced report for September.
Angela Merkel won in Germany's election over the weekend. While there was strong support for Merkel's Christian Democratic Union, Merkel may need to form a coalition with the Social Democrats or the Greens after its ally, the Free Democrats appears unlikely to win seats.
Such a coalition could mean passing legislation through parliament would be more difficult, although any government Merkel forms will encounter challenges given most of the euro zone remains in recession.
ANZ job ads fell 1.4% August, after a revised 4.0% increase in the previous month, further suggesting that conditions remain patchy for the NZ labour market.
Public sector net borrowing ex-interventions was £13.2bn in August, compared to just over £14bn in August 2011 and August 2012.
US St Louis Fed president Bullard said the FOMC decision this week was "borderline" with the October meeting "live" with a small taper possible if economic data "change the complexion of the outlook".
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