FOREX: Dollar drops as Trump ceasefire prompts risk-on turn for markets

The dollar sank to its lowest level in two weeks at the start of trading in Asia on Wednesday, while the euro, yen, Aussie and kiwi rallied hard after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran.

The yen JPY= strengthened 0.6% against the greenback to 158.68 yen per dollar. The euro EUR= was up 0.7% at $1.167, while the British pound GBP= appreciated 0.7% to $1.3385. The Australian dollar AUD= climbed 1.3% to $0.7068 as its New Zealand counterpart NZD= jumped 1.4% to $0.5810.

Trump had earlier threatened widespread attacks on Iran's civilian infrastructure. Markets turned risk-on after the announcement, less than two hours before his deadline for Tehran to reopen the Strait of Hormuz expired.

The U.S. dollar index =USD, which measures the greenback's strength against a basket of six currencies, was down 1.0% at 98.97, a two-week low. Cryptocurrencies also rallied, with bitcoin BTC= advancing 3.4% to $71,664.41, as ether ETH= surged 5.7% to $2,234.78.

-Gregor Stuart Hunter/Reuters