$A lower on Syria concerns The Australian dollar is lower due to the growing possibility of military action by the US in Syria. At 1700 AEST on Wednesday, the local unit was trading at 89.14 US cents, down from 89.56 cents on Tuesday. Westpac senior currency strategist Sean Callow said the Australian dollar was suffering collateral damage from regional turmoil, including huge losses for a number of emerging market currencies. US oil prices have soared to their highest level in 18 months as threats to punish Syria for chemical attacks raised worries over Middle East crude supplies. Mr Callow said the rise in oil prices was a reaction to the conflict in Syria, but the losses for emerging market currencies was driven by the US Federal Reserve's plans to taper its economic stimulus program. "The combination of weakness in emerging markets, a steep rise in the oil price and just general equity market pessimism makes it pretty hard for the Aussie to avoid losing some ground," Mr Callow said. If the oil market is worried about Syria, perhaps the rest of us should be too. There's a lot of risk aversion going on. At 1700 AEST, the Australian dollar was at 86.71 Japanese yen, down from Tuesday's close of 87.91 yen, and at 66.62 euro cents, down from 67.01 euro cents. Meanwhile, Australian bond futures prices were boosted by the possibility of US military action in Syria. Political uncertainty in Italy amid rising tensions in the coalition of the centre-left Democratic Party and Silvio Berlusconi's centre-right People of Freedom had also driven a rally in bond prices, CMC Markets chief market strategist Michael McCarthy said. "There's the potential for war, concerns about destabilisation of the government in Italy, further speculation about the timing of US Federal Reserve tapering which is pushing towards the dovish side of things, so it's not surprising we're seeing a bit of a rally across the board," Mr McCarthy said. This is pushing investors towards the more safe haven investments, including bonds. Although the global growth outlook has improved significantly over the last few months, this last week's events have seen some reversals of the previous trends as investors have moderated their appetite for growth and risk and that's good news for bonds. At 1630 AEST on Wednesday, the September 10-year bond futures contract was trading at 96.095 (implying a yield of 3.905 per cent), up from 96.065 (3.935 per cent) on Tuesday.