[SYDNEY] The Australian and New Zealand dollars stumbled to 4-1/2 month lows on the yen on Wednesday while government bonds surged as investors flocked to safe assets amid intensifying geopolitical tensions.

The Australian dollar fell to 81.85 yen, the weakest since Nov 21, having shed 1.2 per cent overnight. The New Zealand dollar slipped for a second straight day to 75.93 yen, a level not seen since Nov 14.

The yen is favoured by investors during times of stress due to Japan's position as the world's largest creditor nation.

"Geopolitics is certainly the talk of the town," said Chris Weston, chief market strategist at IG Markets.

"The JPY has been the place to be in forex land, and notably selling higher-beta currencies such as the NZD and AUD against the JPY has worked well."

On Tuesday, North Korea warned of a nuclear attack on the United States on any sign of aggression, as a US Navy strike group steamed toward the western Pacific.

US President Donald Trump said in a tweet that North Korea was "looking for trouble" and the US would "solve the problem" with or without China's help.

Traders also favoured short positions in the Aussie against the Canadian dollar as a commodity-driven play. The price of iron ore - Australia's top export earner - has been sliding while oil prices have remained buoyant.

Against the greenback, the Aussie barely moved to hover around key chart support of US$0.7495.

Across the Tasman Sea, the New Zealand dollar edged lower on its US counterpart to US$0.6948. The kiwi has lost 5 per cent of its value since early February as increased global uncertainty jangled investor nerves.

The country's central bank has also quashed any thought of a rate hike this year, shrinking the kiwi's yield advantage over the US dollar.

The geopolitical unease as well as uncertainty over the French presidential election next month have also boosted bonds, another perceived safe haven.

New Zealand government bonds rose, sending yields about six basis points lower on the mid- to longer-end of the curve.

Similarly, Australian debt enjoyed strong interest, with yields on 10-year government bonds at their lowest since Nov 10.

The three-year futures contract added two ticks to 98.21, while the 10-year contract rose 3.5 ticks to 97.475.

REUTERS