The heightened risk aversion sparked a rush to safe-haven government bonds, helping drive Australian bond futures sharply higher. The 10-year contract hit a 2-1/2 year high at 95.885 and last traded at 95.870, up 0.14 points on the day.
New Zealand government bonds also closed solidly bid, sending yields 5.5 basis points lower.
"We're in a world of incredibly nervous markets. There is a lack of political leadership, particularly in Europe and it's global growth that is worrying people," said Grant Turley, strategist at ANZ.
The Aussie plumbed a low around $1.0328 from $1.0460 late New York on Friday, hit by a constant wave of selling. It last stood at $1.0342, having broken through its 200-day moving average at $1.0323, and was currently testing support at $1.0346, the 50 percent retracement of the Aug 9 to Sept 1 rise.
Data showing Australia's trade surplus grew a tad to A$1.83 billion in July from a downwardly revised A$1.82 billion in June barely registered in a market more worried about offshore factors.
Indeed, fears about a Greek debt default came to the fore again after senior German politicians in Chancellor Angela Merkel's centre-right coalition started talking openly about it.
Markets were also bracing for possible credit rating downgrades this week, including those of France's top banks and Italy's sovereign ratings by Moody's.
Reduced appetite for risk also saw both the Aussie and kiwi slip further against the safe-haven yen to multi-week lows, with the Aussie last at 79.79 yen , and the New Zealand dollar at 62.93 yen .
KIWI ALSO HIT
The kiwi last traded at $0.8158, having dipped briefly to a four-week low of $0.8140, down sharply from around $0.8215 at the end of last week.
The kiwi's fall below $0.8200 signalled more weakness ahead.
"If the NZ dollar remains below this line, a decline to below $0.8000 is likely during the next week or two," said Westpac senior strategist Imre Speizer, adding that unwinding of speculative positions would be a further weight on the currency.
The market ignored minor New Zealand data showing a modest lift in wholesale sales in the second quarter, and a rise in demand for accommodation. See
The key focus this week is the Reserve Bank of New Zealand's monetary statement on Thursday, which is expected to see rates on hold as the uncertain and fragile global environment overshadows other considerations.
But financial markets are still reluctant to totally give away the prospect of a rate rise, which only a month ago seemed a sure bet. Market pricing implies an 8 percent chance of the RBNZ raising 25 basis points rise this week, with 42 basis points of tightening over the next 12 months.