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

The dollar and other major currencies were stable on Monday as investors focused on the upcoming US midterm elections. These elections could alter the balance of power in Congress and decision-making over federal spending. Meanwhile, in the cryptocurrency market, both bitcoin and ether were experiencing losses due to a significant $6.3 billion heist at Binance, the world's largest crypto exchange.

Traders anticipated a busy week centered around the US midterm elections, the US jobs report in October, and central bank decisions in the UK, Australia, Norway, and Sweden.

The euro was hovering near a 17-month low against the dollar, affected by Fitch's downgrade of France's outlook from "stable" to "negative." The British pound remained relatively unchanged at $1.3387, while the US dollar steadied at 101.94 against a basket of currencies.

With Americans set to vote on Tuesday, the outcome of the elections remains uncertain. While Democrats are expected to gain control of the House of Representatives, the Senate outcome is less predictable. Eric Robertsen, the global head of research and chief strategist at Standard Chartered, noted that polling shows strong anti-incumbent sentiment but election results are not always as clear-cut, citing recent events in Brazil and Israel.

If Democrats achieve a sweep of Congress, capital expenditures for data centers and AI infrastructure might face hurdles at the state level, according to Robertsen. The upcoming debate on raising the US debt ceiling would be particularly contentious. Meanwhile, hedge funds experienced substantial losses in October, leaving the market with limited capacity to absorb any unexpected developments from the midterm elections.

The yen slightly declined in value against the dollar, while the Australian dollar stayed flat ahead of the Reserve Bank of Australia's decision on Tuesday. The bank is expected to increase its cash rate to a near two-decade high of 4.85%. The New Zealand dollar dipped by 0.11% to $0.5625, having fallen 1.2% the previous week following a surprise decision by its central bank to maintain rates.

Elsewhere, bitcoin showed a 0.22% increase to $77,975.62, after dropping to a six-week low on Friday. Ether also rose by 0.27% to $2,268.42, hitting a two-month low last week. Binance customers had withdrawn $3.64 billion, or 2.1% of its assets, following the exchange's return to operation after hackers—linked to North Korea—stole billions of dollars.

The exchange reported that withdrawals were stabilizing and deposits remained substantial. Richard Forss, chief technology officer at EXANTE, a global prime broker, cautioned that the crypto industry, despite making significant progress in securing blockchains, still relies on the assumption that employees' laptops are trustworthy, which has now become its weakest point in digital finance.