SYDNEY: The Australian and New Zealand dollars fell to three-week lows against their US counterpart on Wednesday, as stress in emerging markets and jitters over Syria fuelled a flight to safety that benefited the yen and sovereign bonds.
Versus the euro and Swiss franc, they fell to multi-year troughs.
The Aussie retreated more than half a yen to 86.52 having shed 2 percent on Tuesday, and threatened to breach the August low, and major support, at 86.36.
The kiwi followed to 75.51 yen, making a fall of 2.5 percent in two days.
The Aussie was in turn dragged down to $0.8910, from $0.8987 late in New York, while the kiwi eased to $0.7768, from $0.7797.
The euro climbed as far as A$1.5021, a level unseen since 2010 and was headed towards A$1.5456, the May 21 2010 peak.
Likewise against the kiwi, the euro powered up as far as NZ$1.7274, the December 2011 high, and last traded at NZ$1.7212.
"The Aussie failed to hold any gains this week and is at risk of heading back to the August low of $0.8848, and maybe even lower," said a trader at a European bank in Singapore.
Dealers partly blamed renewed turmoil in emerging markets as the Aussie is often sold as a proxy for less liquid currencies in the Asian region.
The Indian rupee and Indonesian rupiah have been under particular pressure as investors fret about current account deficits and policy missteps.
Investors are also bracing for an end to the supply of cheap dollars from the US Federal Reserve's monetary stimulus, prompting a capital flight from these markets.
Concern that the United States and its allies were gearing up for a military strike against Syria, possibly within days, also hurt sentiment..
"I don't see any sustained upside for the Aussie in the near future. It will remain generally heavy," the trader said.
Immediate support was found at the three-year trough of $0.8848 ahead of $0.8775.
One positive for the Aussie was a sharp rise in the price of gold, a major export-earner for Australia. The metal climbed to $1,423 an ounce, having risen almost $50 in four sessions.
The gain was even bigger in Australian dollar terms, where gold shot to a six-month peak at A$1,598 an ounce bringing the rise since late June to 24 percent.
Australian bonds also benefited from the rush from risk, with 10-year yields dropping to 3.89 percent in a huge turnaround from a peak of 4.13 percent just a week ago.
Three-year government bond futures were up 3 ticks on Wednesday at 97.250, making a gain of 18 ticks in the past week. The 10-year contract added 5 ticks to 96.115.
New Zealand government bonds likewise gained, sending yields as much as 4 basis points lower at the end of the curve.
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