Dollar rangebound ahead of US midterms, bitcoin reels from crypto heist

The dollar and other major currencies were in a holding pattern on Monday as investors turned their attention to this week’s US midterm elections, which could shift the balance of power in Congress and control over the federal purse strings.

In cryptocurrencies, bitcoin and ether were nursing losses following last week’s record US$6.3 billion heist at Binance, the world’s largest crypto exchange.

Traders were bracing for a packed week dominated by the US midterm elections, October US jobs data and central bank rate decisions in the UK, Australia, Norway and Sweden.

Ahead of the week’s events, the euro languished near a 17-month low at US$1.1159 in early Asian trade, weighed down by Fitch’s revision of France’s outlook to “negative” from “stable” after Friday’s close.

Sterling was little changed at US$1.3387, while the dollar steadied at 101.94 against a basket of currencies.

Americans head to the polls on Tuesday to determine whether Democrats can wrest control of Congress away from US President ​Donald Trump’s Republican Party. Democrats are widely predicted to win the House of Representatives, but the Senate is more in doubt.

“The challenge we face in analysing election outcomes is that polling suggests strong anti-incumbent sentiment, but that does not always translate into actual election outcomes – as we have seen in Brazil and now in Israel,” said Eric Robertsen, global head of research and chief strategist at Standard Chartered.

In the event of a Democratic sweep of Congress, Robertsen said capex plans for data centres and AI infrastructure could face increasing obstacles at the state level, while the next debate on raising the US debt ceiling would be among the most contentious in recent history.

Meanwhile, Andreja Cobeljic, head of derivatives trading at AMINA Bank, said hedge funds had suffered “significant losses” in October, leaving markets with “little capacity” to absorb any surprises from the midterm elections.

In other currencies, the yen eased 0.15% to 157.78 per dollar. The Australian dollar was flat at US$0.7033 ahead of Tuesday’s policy decision, where the Reserve Bank of Australia is widely expected to raise its cash rate to a near two-decade high of 4.85%.

The New Zealand dollar fell 0.11% to US$0.5625, having slid 1.2% last week in the wake of its central bank’s surprise decision to leave rates unchanged.

Elsewhere, bitcoin was up 0.22% at US$77,975.62, having fallen to a six-week low on Friday. Ether was up 0.27% to US$2,268.42, having similarly slid to a two-month trough last week.

Binance customers pulled US$3.64 billion, or 2.1% of its assets, as the exchange went back online on Sunday after hackers the FBI links to North Korea stole billions from the platform last week.

Binance said withdrawals were stabilising after an initial spike and deposit volumes had remained “substantial”. The exchange said it had now covered 95% of the US$6.3 billion of stolen assets.

“The crypto industry has spent a decade making blockchains mathematically secure. It still runs on the assumption that an employee’s laptop can be trusted,” said Richard Forss, chief technology officer at global prime broker EXANTE. “That assumption is now the weakest point in digital finance.”

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