Crypto News: 5 things to start your day

Good morning. Iran's foray into the Red Sea, ASML cancels shipments to China and Bitcoin hits the highest in nearly two years. Here's what people are talking about.

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Iran dispatched a warship to the Red Sea after the US Navy destroyed three Houthi boats. The Alborz destroyer traversed the Bab El-Mandeb strait, a narrow choke point between the Red Sea and the Gulf of Aden, on Monday, Iranian state media said without providing further information on the vessel's mission. Iran's foray into the Red Sea a day after the US action compounds a highly volatile situation in the channel that handles about 12% of the world's commerce. Brent crude and West Texas Intermediate climbed.

ASML Holding canceled shipments of some of its machines to China at the request of US President Joe Biden's administration, weeks before export bans on the high-end chipmaking equipment came into effect, said people familiar with the matter, who asked not to be identified because the discussions were confidential. The Dutch manufacturer had licenses to ship three top-of-the-line deep ultraviolet lithography machines to Chinese firms until January when new Dutch restrictions take full effect. However, US officials reached out to ASML to ask them to immediately halt pre-scheduled shipments of some of the machines, the people said.

Bitcoin surpassed $45,000 for the first time in nearly two years as anticipation of an approval of an exchange-traded fund investing directly in the biggest token intensified. The cryptocurrency jumped as much as 4% to its highest level since April 6, 2022 and traded at $44,844 as of 9:45 a.m. Singapore time. Bitcoin has risen over 15% since the start of December as a Jan. 10 deadline for the US Securities and Exchange Commission to give its blessing for a spot ETF Bitcoin draws closer.

Chinese President Xi Jinping pledged to strengthen economic momentum and job creation, acknowledging some companies and citizens had endured a difficult 2023 in a rare admission of domestic headwinds facing the country. While China's most-powerful leader since Mao Zedong used his annual new year address to trumpet his nation's achievements, he also conceded some "enterprises had a tough time" and "people had difficulty finding jobs and meeting basic needs." Analysts said Xi's address didn't move the needle, with the market still expecting a rate cut by the central bank to boost the economy in the first quarter of 2024.

European shares are set to rise as Asian stocks lacked momentum in the first trading day of the year. Upcoming data include regional manufacturing PMIs. Tesla is expected to say it had another record delivery year in 2023, in large part due to Elon Musk fans and tech-savvy early adopters. It's an otherwise light day for corporate results.

Are investors too optimistic about this earnings season, or not optimistic enough? What are the biggest risks to corporate earnings this year? Share your views in the latest MLIV Pulse survey.

This is what's caught our eye over the past 24 hours.

Here's (almost) everything Wall Street expects in 2024.
UK food inflation drops as grocers compete for Christmas sales.
Twenty dead in Japan after major quake topples buildings.
Cheap China stocks lure investors who see 60% slump as rock bottom.
Musk's X value cut by another Fidelity writedown, Axios reports.
Electric car models eligible for $7,500 US tax credit cut to 13.
Israel cuts force size in Gaza as it enters next phase of Hamas war.

EUR/USD is slightly lower in Asia, but that could reverse later today with a round of European PMI reports. Given that most nations in the region are expected to post PMIs below 50, there is more room for a positive surprise in terms of FX reaction.

Moreover, traders betting on an early lowering of interest rates by the European Central Bank could be disappointed. After a Federal Reserve pivot, the ECB is unlikely to follow fast, according to Bloomberg Economics. The ECB will need time to be satisfied that inflation is on the right trajectory.

Meanwhile, leveraged punters still hold large net short euro exposure. A squeeze above the recent high of 1.1139 could trigger a rush of short covering, especially as risk reversals have barely captured the euro strength seen in December. Indeed, the three-month skew is still below zero which suggests euro bulls are still on the sidelines.