Dollar Falls as Iran Ceasefire Sparks Global Market Rally
The U.S. dollar dropped to its lowest level in a month, while major global currencies surged during Asian trading on Wednesday. The move followed an announcement by U.S. President Donald Trump confirming a two-week ceasefire agreement with Iran, which immediately boosted market sentiment.
The Japanese yen gained 0.8% against the dollar, reaching 158.36 per dollar. The euro rose 0.7% to $1.1674, while the British pound advanced 0.8% to $1.34. Meanwhile, the Australian dollar led gains, climbing 1.1% to $0.7054.
Geopolitical Tensions Ease After Ceasefire Deal
Earlier, Trump had warned of potential large-scale attacks targeting Iran’s civilian infrastructure, drawing strong global criticism. He issued a dramatic statement suggesting that “a whole civilization will die tonight” if his conditions were not met.
However, investor sentiment shifted rapidly after the ceasefire announcement, which came less than two hours before a key deadline for Iran to reopen the Strait of Hormuz.
Risk Appetite Returns, but Uncertainty Remains
With tensions easing, markets quickly transitioned into a risk-on environment. Analysts noted that reopening the strategic waterway could further support the rally.
Ray Attrill, head of FX strategy at National Australia Bank, stated that markets could consolidate recent gains if stability holds. However, he cautioned that the next two weeks will be critical and that traders should remain cautious, as currency movements could reverse if conditions change.
Oil Prices Drop as Focus Shifts to Central Banks
Attention shifted toward central bank policy expectations as oil prices declined sharply. Brent crude fell 13.4% to $94.68 per barrel, though it remained significantly above pre-conflict levels.
The New Zealand dollar rose 1.5% to $0.5819 after the Reserve Bank of New Zealand maintained its interest rate at 2.25% for a second consecutive meeting. The central bank indicated it is prepared to act if inflation pressures increase.
Federal Reserve Rate Cut Expectations Change
Market expectations for U.S. monetary policy also shifted. According to CME Group’s FedWatch tool, traders now see roughly even odds that the Federal Reserve could implement a 25 basis point rate cut at its December 9 meeting. This marks a notable change from the previous day, when markets strongly expected the Fed to hold rates steady.
Dollar Index Weakens, Global Currencies Strengthen
The U.S. dollar index declined for a third consecutive session, falling to 98.838—its lowest level since March 11. The broader weakness in the dollar reflected improving global risk sentiment.
In Asia, the South Korean won strengthened by 1.6% to 1,477.10, marking its largest daily gain since the start of the Iran conflict. This came despite renewed tensions on the Korean peninsula, where North Korea launched multiple ballistic missiles into the sea off its east coast.
Cryptocurrencies Join the Global Rally
Digital assets also benefited from the shift in sentiment. Bitcoin gained 2.9% to reach $71,327.07, while Ethereum surged 5.6% to $2,233.90, reflecting increased investor appetite for risk assets.
