SYDNEY/WELLINGTON: The Australian and New Zealand dollars came off multi-week highs on Wednesday as risk appetite took a knock on worries the United States and its western allies were planning a military strike on Syria.
The market is nervous any action by the United States could provoke a response from Russia which opposes any Western strike on its close ally Syria.
The Australian dollar slipped 0.2 percent to $0.7747 from a three-week high of $0.7770 touched earlier in the day.
The New Zealand dollar eased 0.1 percent to $0.7355 after climbing to $0.7376, the highest since Feb. 21.
The antipodean currencies gained overnight on signs of trade rapproachement between the United States and China, although there were still jitters over progress of tariff negotiations.
A serious escalation of trade tensions would "damage" the Australian economy, the country's top central banker said on Wednesday.
Reserve Bank of Australia (RBA) Governor Philip Lowe said the main uncertainty around the country's economic outlook lay in the "international arena," highlighting the specre of a trade war.
He reiterated the need for interest rates to remain at record lows as policymakers await a pick-up in economic activity and inflation. The RBA has left rates at 1.50 percent after last easing in August 2016, the longest stretch of stable rates on record.
Across the Tasman Sea, Reserve Bank of New Zealand assistant governor John McDermott is due to give a speech on inflation targeting on Thursday.
New Zealand government bonds eased, sending yields 1 basis point higher towards the end of the curve.
Australian government bond futures were mixed, with the three-year bond contract down half a tick at 97.815. The 10-year contract edged up 2 ticks to 97.305.