The Australian dollar is recovering from a sharp dive and bonds price are easing back from strong rallies as calm returns to markets following the US military missile strike on Syria.
The local unit was sitting at 75.30 cents at 1530 AEDT on Friday, from 75.38 cents before the news broke at about 1100.
News of the attack shook the markets with traders selling off the risky Aussie and piling into safe-haven assets like bonds.
By 1211 the currency had plummeted to a one-month low of 75.17 US cents.
Westpac senior currency strategist Sean Callow said the market hadn't expected the attack on a Syrian airbase as US President Donald Trump had been dining with Chinese President Xi-Jinping when it occurred.
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"The markets weren't ready for the dinner to be wrapped up quickly so the missiles could be fired," he told AAP.
"The swing in Trump's rhetoric (about Syria) wasn't expected either."
Meanwhile, local bond prices turned in the opposite direction, hitting their highest levels since rolling over in December.
By noon on Friday the June 2017 10-year bond futures contract had jumped to 97.445 (implying a yield of 2.555pct), while the June 2017 3-year bond futures contract was up at 98.210 (1.790pct).
However, the bond contracts had eased back to 97.430 and 98.190, respectively, by 1530 AEST.
National Australia Bank senior currency analyst Rodrigo Catril said the Australian dollar and bond prices would likely remain under pressure amid uncertainty about what President Trump's plans are for Syria and more importantly how Syria's ally Russia would respond to the attack.
"The best outcome for the Aussie right now is that Russia doesn't step in," Mr Catril said.
ThinkMarkets senior market analyst Matt Simpson noted that even before the attack the Aussie had been drifting lower amid investor concerns over the domestic economy, particularly the housing market, bank lending, high household debt and weak employment.
"The Australian Dollar has already been under broad pressure this week after their central bank (RBA) expressed further concerns over financial stability and weaker employment," he said in a note.
