The risk-off shift badly wrong footed a market that had been heavily long of both currencies after recent sharp gains, particularly against the yen.
Long-liquidation sees the Aussie dive 3.8 percent against the yen to 99.36, the largest daily drop since March 2011 and well off last week's peak of 105.43.
The kiwi also down 3.8 percent at 81.02 yen, and off its high of 86.43.
The New Zealand dollar slides to $0.8420, from $0.8506 late on Monday, having traded as low as $0.8376 overnight, a 10-day low. It has shed around 2 percent over the past day.
Kiwi support seen at $0.8364, the 50-day moving average, and below that $0.8350, with the topside contained at $0.8450.
The Aussie slumps to $1.0310, from Monday's late local level of $1.0424. It dived to a one-month low in the offshore session of $1.0291.
Aussie near term support seen at $1.0283 the mid-March low, with $1.0350 resistance.
The yen rises from recent multi-year lows against the dollar and euro as renewed worries about the global economy spur a sell off of riskier investments funded by the relatively cheap Japanese currency.
The weaker than expected Chinese growth data from Monday spooked investors, while disappointing US manufacturing and homebuilder sentiment stoke concerns the global economy may be losing momentum. US stocks fall as much as 2.4 percent.
Gold slumps around 10 percent, its worst 2-day rout in 30 years, taking with it other previous metals. Oil also falls towards $100 barrel. The 19-commodity Thomson Reuters-Jefferies CRB index falls 2.2 percent.
Weak markets take a further blow on news of explosions near the Boston Marathon finish line, killing 2 and injuring 23, which added more weight to the sell off of risk sensitive currencies.
Aussie and kiwi also knocked 1.3 percent lower against euro, which trades at A$1.2644 and NZ$1.5500 . Both currencies also around 1.5 percent lower on sterling.
Australia has the minutes of the Reserve Bank of Australia's policy meeting earlier this month and a speech by RBA Asst. Governor Guy Debelle.
The flight to safety sees Australia's three-year futures contract jump 0.060 points to 97.360, the highest since mid-December. The 10-year contract rises 0.075 points to a four-month high of 96.830.
New Zealand bonds open with bid tone, sending yields 3 basis points lower along the curve.
The maturity of the 2013 NZ government bond and coupon payments for April 2015 and 2023 bonds cited as added factors weighing on the kiwi.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>