Dollar rangebound ahead of US midterms; bitcoin reels from crypto heist
The dollar and other major currencies were on pause Monday as investors turned their focus to this week’s US midterm elections, which could alter the balance of power in Congress and control of the federal purse strings.
Cryptocurrencies bitcoin and ether were nursing losses after last week’s record $6.3 billion robbery at the world’s biggest crypto exchange, Binance.
Traders were preparing for a busy week headlined by the US midterm elections, October US jobs data and central bank rate announcements in the UK, Australia, Norway and Sweden.
The euro was pinned near a 17-month low of $1.1159 in early Asian trading ahead of the week’s events, pulled down by Fitch’s downgrade of France’s outlook to “negative” from “stable” following Friday’s close.
Sterling was little changed at $1.3387 and the dollar was steady at 101.94 against a basket of currencies.
Americans flock to the polls Tuesday to see if Democrats can seize control of Congress from US President Donald Trump’s Republican Party. The Democrats are expected to win the House of Representatives, but the Senate is less certain.”The problem we have when we analyse election outcomes is that polling suggests there is strong anti-incumbent sentiment but that does not always translate into actual election outcomes – we have seen that in Brazil and now in Israel,” said Eric Robertsen, global head of research and chief strategist at Standard Chartered.
“The capex plans for data centers and AI infrastructure could run into increasing obstacles at the state level in the event of a Democratic sweep of Congress, while the next debate on raising the US debt ceiling would be one of the most contentious in recent history,” Robertsen added.
Meanwhile, Andreja Cobeljic, head of derivatives trading at AMINA Bank, claimed hedge funds had taken “significant losses” in October, leaving markets with “little capacity” to absorb any surprises after midterm elections.
The yen fell 0.15 percent against other currencies to 157.78 per dollar. The Australian dollar was unchanged at $0.7033 ahead of Tuesday’s policy announcement when the Reserve Bank of Australia is widely expected to lift its cash rate to a near two-decade high of 4.85%.
The New Zealand dollar dropped 0.11% to $0.5625 after a 1.2% decline last week following a surprise decision by its central bank to hold rates steady.
Bitcoin was up 0.22% at $77,975.62 elsewhere after falling to a six-week low on Friday. Ether was up 0.27% at $2,268.42, also falling to a two-month low last week.
Hackers tied by the FBI to North Korea stole billions from the platform last week, and users withdrew $3.64 billion, or 2.1% of Binance’s assets, as the exchange resumed operations on Sunday.
Binance claimed withdrawals had stabilised following an initial rise and deposit volumes had remained “substantial.” The exchange says it has already recouped 95% of the $6.3 billion of stolen assets. “It’s taken ten years for the crypto industry to make blockchains theoretically safe. It still assumes you can trust an employee’s laptop,” said Richard Forss, chief technology officer at global prime broker EXANTE. “Now that assumption is the weak link in digital finance.