The Australian and New Zealand dollars tumbled to more than four-month lows on the yen as investors fled risk after the United States fired a barrage of missiles against a Syrian air base controlled by President Bashar al-Assad's forces.
The Australian and New Zealand dollars tumbled to more than four-month lows on the yen as investors fled risk after the United States fired a barrage of missiles against a Syrian air base controlled by President Bashar al-Assad’s forces. The Australian dollar dropped to 82.84 yen, its lowest since mid-November on concerns about a potential escalation in the Syrian conflict following the U.S. attack. The New Zealand dollar slipped to 76.74 yen.
Yields on Australian 10-year bonds dropped sharply to their lowest since mid-November at 2.52 percent as high-rated sovereign bonds rallied globally.
The missile strikes, launched in retaliation to a deadly chemical attack in a rebel-held area, raises the risk of confrontation with Russia and Iran, Assad’s two main military backers.
In response, safe-haven assets such as U.S. Treasuries, gold and the yen bounced while emerging market currencies and shares slid.
“The initial implication has been a risk-off reaction. It’s affected risk sensitive as well such as the Aussie,” said Rodrigo Catril, currency strategist, National Australia Bank.
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“We are watching oil prices as well. We have to see what Donald Trump is going to say later and any reaction from Russia is important too. It’s a bit hard to have a view at this stage but a risk off turn is very evident.”
Against the greenback, the Aussie made a one-month trough of $0.7518 while the New Zealand dollar held at $0.6961.
New Zealand government bonds edged higher sending yields 2 basis points lower at the longer end of the curve.
Australian government bond futures gained too, with the three-year bond contract up 7 ticks at 98.22. The 10-year contract added 5.5 ticks to 97.4450.