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Australia, NZ dollars tumble vs yen after US missile strikes on Syria

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[BENGALURU] 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 US 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 per cent 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.

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In response, safe-haven assets such as US 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.

"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 US$0.7518 while the New Zealand dollar held at US$0.6961.

New Zealand government bonds edged higher sending yields two basis points lower at the longer end of the curve.

Australian government bond futures gained too, with the three-year bond contract up seven ticks at 98.22. The 10-year contract added 5.5 ticks to 97.4450.


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