But hopes the US Federal Reserve and the European Central Bank would soon add more stimulus to revive their respective economies helped limit losses in high-beta currencies like the Aussie dollar.
The Aussie slid to an early low of $1.0271, retreating from Friday's high of $1.0355, following a report showing China's vast manufacturing sector slowed further in July.
It then quickly recovered some ground to stand at just below $1.0300. Initial support is seen around $1.0220, the 38.2 percent retracement of its June to August rally.
"The AUD gapped lower this morning on the weak (Chinese) data. It has not fallen further due to renewed US QE3 expectations after Friday's speech," said Annette Beacher, head of Asia-Pacific research at TDSecurities.
Fed Chairman Ben Bernanke on Friday said the stagnation in the US labour market was a "grave concern", sparking hopes the central bank would launch a fresh round of bond purchases at its upcoming meeting in September. But Bernanke stopped short of providing a clear signal of imminent action.
The euro suffered a smaller setback, slipping to a low of $1.2550 from an eight-week peak of $1.2638 set on Friday. That saw the dollar index edge up a touch to 81.233, pulling away from three-month lows of 80.964 set Friday.
Against the yen, the greenback traded at 78.57, having plumbed a three-week low of 78.187 on Friday.
Speculation is intense that the ECB will this week unveil its strategy to tackle the euro zone's debt crisis, probably at its policy meeting on Thursday.
ECB President Mario Draghi skipped the weekend's Jackson Hole retreat to try to smooth over a deep rift within the ECB over the bond scheme that is increasingly being played out in public.
The market's immediate focus is a batch of economic data out of Asia on Monday, including HSBC's final report on China's manufacturing activity as well as Australia's retail sales and business inventories figures.
More disappointment in today's numbers could add to the market's risk-off tone, keeping the Aussie under pressure.