The Aussie dollar plumbed one-month lows against both the US dollar and yen, undermined by Japanese sales. It dipped to $1.0345, its weakest since late July, to last fetch $1.0360.
"The AUD has been trading heavily with an overhang of long speculative positioning," said Sue Trinh, a senior currency strategist at RBC Capital Markets in Hong Kong.
The Aussie has retreated more than 2 percent on the USD since hitting a near five-month high earlier in August. It was partly dragged lower by a sharp correction in the EUR/AUD.
Persistent worries about China's economic health has also been heavily weighing on the local currency after a run of disappointing data in Beijing added to concerns for Australia's commodity exports.
The next big test will take place on Saturday with the release of China's official manufacturing PMI. Last week, a private survey conducted by HSBC showed China's factory activity in August shrank at its fastest pace in nine months.
The Australian dollar is very sensitive to news out of China, the country's biggest export market.
For now, strong support is found near $1.0330. RBC's Trinh said a break of $1.0306, the 200-day moving average, would leave $1.0200/10 vulnerable.
The Australian dollar was nursing chunky losses against a broadly stronger yen. It skidded to 81.25 yen, its weakest since late July, and looked set to test 81.04, the 61.8 percent of the 79.49-83.57 move.
The New Zealand dollar fell to a two-week low of $0.8057 from $0.8082 after dairy giant Fonterra cut its forecast payout for the coming season by around 5 percent. It last sat at$0.8074 in late trade.
Dairy is closely-tracked by markets because it is the country's biggest export earner.
"The Fonterra news has taken the market by surprise. The kiwi remains on the backfoot," said Tim Kelleher, head of institutional FX sales at ASB Bank.
He said the currency looked set to test key $0.8000 level if the $0.8050 could be breached.
EURO EXTENDS GAINS
The Antipodeans were under pressure against the euro, hovering very close to seven-week lows.
The common currency rose to NZ$1.5491, its highest since July 12, before steadying at NZ$1.5448. It last stood at A$1.2053 against the Aussie, very near A$1.2071 touched on Friday.
The euro has put on 2.8 percent against the Aussie so far in August, the largest monthly gain since March. It has been underpinned by a massive unwinding of bearish euro bets, even though there has been no new concrete development on a European debt rescue plan.
Charts show the next big level for the euro is A$1.2140.
Markets have generally been subdued as investors waited for concrete monetary policy action in Europe and the United States.
Fed Chairman Ben Bernanke will speak at the annual Jackson Hole meeting on Friday ahead of the Fed's Sept. 12-13 policy meeting. Bernanke has used the event in the previous two years to signal the Fed's policy intentions.
European Central Bank President Mario Draghi will also speak at the event on Saturday.
New Zealand government bonds edged up, sending yields 2 to 4 basis point lower.
Australian government bonds firmed near three-week highs with the three-year contract adding 0.02 points to 97.410 and the 10-year contract up 0.015 points to 96.900.