Profit-taking shaved the Aussie to $1.0355, from $1.0378 in early trade. But it is still up nearly two cents since it hit a two-month trough of $1.0165 last week, having risen as high as $1.0401 on Friday.
The currency was weighed somewhat by soft trade data from China, though that was offset by expectations of more spending by Beijing on infrastructure.
China's imports from Australia actually rose 10 percent in August, from the previous month, a surprise given all the talk of slumping iron ore shipments.
Still, annual growth in imports from Australia did slow further to 2.9 percent, against an average between January and May of around 21 percent, said Adarsh Sinha, a strategist at Bank of America Merrill Lynch in Hong Kong.
"It's not massive negative news for the Aussie dollar as such, but it's not great news either. It's still running at a much weaker pace than we saw in the first half of the year."
Australia is very sensitive to news out of China, its top export market.
Resistance was now found around $1.0400, the high of Sept 7, ahead of $1.0444, the 61.8 percent of the Aug-Sept fall. Support is seen at 1.0340/55.
This week's main risk event is the US Federal Reserve's monetary policy meeting on Sept 12-13. Speculation is mounting that, following a weak jobs report on Friday, the Fed will announce another round of bond buying.
BofA-Merrill Lynch's Sinha is sceptical the Fed will act.
"The market has some sort of QE (quantitative easing) action priced in on Thursday... but in my view, it's not a done deal. It's more 50/50," he said, adding the Fed should consider waiting.
Should the Fed refrain from launching QE, he sees the Aussie immediately falling to around $1.0200.
Against the Antipodeans, the euro eased to A$1.2341 from a two-month peak of A$1.2390 hit last week and to NZ$1.5741, not far from NZ$1.5903, its strongest since late June.
NEW ZEALAND DOLLAR
The New Zealand dollar sat around $0.8120, having briefly edged up to a two-week high of $0.8134, as it benefited from the improved risk climate.
Offshore events, such as the Federal Reserve's meeting and Germany's decision about the European bailout fund, are seen overshadowing local ones this week, and are likely to underpin the kiwi.
"Fresh liquidity stemming from QE (quantitative easing) is likely to benefit the NZ dollar, which remains on the 'beauty contest' podium," ANZ analysts said in a market commentary.
Near-term support for the kiwi is seen at $0.8100 and below that $0.8079, while trendline resistance was seen at $0.8134 and then $0.8168.
The kiwi was outperforming the Aussie, which resulted in the cross rate easing to a two-month low at NZ$1.2737 before managing a slight lift to NZ$1.2751.
Local data showed a modest rise of 0.3 percent in manufacturing volumes in the second quarter, which was seen as consistent with economic growth of around 0.2 to 0.4 percent.
The main local event is the Reserve Bank of NZ's monetary policy statement on Thursday, the last from the outgoing Governor Alan Bollard. He is seen leaving rates on hold for the 12th consecutive meeting, but could perhaps take a tilt at the strength of the currency.
Market pricing implies a 6 percent chance of a rate cut this week, and 12 basis points of cuts over the next 12 months . In contrast, Australian interbank futures imply around a 50-50 chance of a cut to 3.25 percent in October.
New Zealand government bonds closed higher, which sent yields as much as 6.5 basis points lower. Australian bond futures rose with both three-year and 10-year contracts up 0.07 points to 97.530 and 96.965 respectively, having touched one-month highs last week.