The Australian dollar slipped on Monday as traders were cautious ahead of an expected interest rate cut by the country's central bank while disappointing economic data from top trading partner China also weighed.
The Australian dollar fell for the first time in nine sessions to a low of $0.6942. It was last down 0.3% at $0.7002.
The Aussie climbed 1.4% last week, clocking its second straight weekly rise largely led by a subdued US dollar.
The gains are unlikely to be sustained though as the US Federal Reserve was no longer expected to ease policy as aggressively as previously thought while a thaw in a heated Sino-US trade war has also revived the greenback.
The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.
"Despite a marginal improvement in trade sentiment supporting risk, the short-term AUD outlook remains more neutral ahead of the RBA on Tuesday," analysts at ANZ said in a note.
The Reserve Bank of Australia (RBA) is seen all but certain to reduce its cash rate again at its July 2 board meeting to a new all-time low of 1.00%. Rates are seen as low as 0.7% by the middle of next year.
RBA Governor Philip Lowe will follow up the rate decision with a dinner speech on Tuesday which is likely to provide further cues about the future direction of monetary policy.
Another drag on the Aussie was signs of strains in the Chinese economy with data showing the country's factory activity unexpectedly shrank in June as domestic demand and exports faltered.
China is Australia's No.1 trading partner and the biggest buyer of the country's iron ore and coal. So a slowdown would augur poorly for Australia's already struggling economy.
Across the Tasman Sea, the New Zealand dollar snapped its 10-day winning streak to fall 0.15% to $0.6707.
The kiwi got a brief fillip last week when the Reserve Bank of New Zealand (RBNZ) skipped a chance to cut rates, though it did say another easing would likely be needed given risks to growth globally and at home.
Markets imply around a 69% chance of a quarter-point cut when the central bank next meets on August 7, and has priced in a further easing to 1% by mid-2020.
New Zealand government bonds eased slightly, sending yields about 2-3 basis points higher across the curve.
Australian government bond futures slipped, with the three-year bond and the 10-year contracts off 1.5 ticks at 99.065 and 99.66 respectively.