Major currencies were largely rangebound on Monday as markets keyed in on this week’s US midterm elections and a slate of central bank decisions, while cryptocurrencies nursed losses after a record theft at the world’s largest crypto exchange.
In early Asian trade the euro lingered near a 17-month low at $1.1159, pressured by Fitch’s decision to revise France’s outlook to "negative" from "stable" following Friday’s close. Sterling was little changed at $1.3387, while the dollar held steady at 101.94 on the dollar index. Traders said attention had shifted to a week dominated by the US midterm vote, October US jobs data and rate decisions in the United Kingdom, Australia, Norway and Sweden.
Political focus, market caution
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. Polls and market commentary suggest the House race is leaning toward Democrats, with the Senate outcome more uncertain.
Eric Robertsen, global head of research and chief strategist at Standard Chartered, warned of analytical difficulties in translating polls into outcomes. "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," he said.
Robertsen added that a Democratic sweep of Congress could complicate capital expenditure plans at the state level for data centres and AI infrastructure, and that the next confrontation over raising the US debt ceiling would be among the most contentious in recent memory.
Market participants also noted diminished shock-absorption capacity following a difficult month for certain investors. "Hedge funds had suffered 'significant losses' in October, leaving markets with 'little capacity' to absorb any surprises from the midterm elections," said Andreja Cobeljic, head of derivatives trading at AMINA Bank.
FX movers and policy expectations
The yen eased 0.15% to 157.78 per dollar. The Australian dollar was flat at $0.7033 ahead of Tuesday’s Reserve Bank of Australia decision, where the central bank is widely expected to raise its cash rate to a near two-decade high of 4.85%. The New Zealand dollar slipped 0.11% to $0.5625 after a 1.2% drop last week following its central bank’s surprise decision to keep rates unchanged.
Overall, currency action was muted as traders positioned for a week of potentially market-moving headlines rather than immediate directional bets.
Crypto markets grapple with hack fallout
Cryptocurrencies were recovering from losses tied to a major breach at Binance. Bitcoin was trading up 0.22% at $77,975.62 after hitting a six-week low on Friday. Ether was up 0.27% at $2,268.42, after sliding to a two-month trough last week.
Binance customers reportedly withdrew $3.64 billion, or about 2.1% of the exchange’s assets, as the platform resumed operations on Sunday following the theft in which hackers the FBI links to North Korea stole billions. The exchange said withdrawals had stabilised after an initial spike and that deposit volumes remained "substantial." Binance also reported it had now covered 95% of the $6.3 billion of assets stolen in the incident.
Industry technologists cautioned that operational security remains a weak point despite blockchain-level safeguards. "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."
What to watch this week
- US midterm election results and any immediate market reaction.
- October US jobs data, which could influence Fed expectations.
- Central bank decisions in the UK, Australia, Norway and Sweden.
With hedge funds reported to have recorded losses in October and political uncertainty rising, traders said market liquidity and resilience were factors to watch as events unfold.
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