The Australian dollar is almost a third of a US cent lower after the release of weaker than expected retail trade data.
At 1700 AEDT on Monday, the local unit was trading at 104.06 US cents, down from 104.33 cents on Friday.
Australian Bureau of Statistics figures released on Monday showed that retail spending was unchanged in October, compared to the rise of 0.4 per cent the market had forecast.
The Australian dollar fell as low as 103.93 US cents in the half hour after the retail sales figures were released but rose slightly after a HSBC report showed that manufacturing activity in China hit a 13-month high in November.
CMC Markets senior trader Tim Waterer said recent Chinese economic figures are helping maintain a positive market mood in the face of a lack of progress on US budget talks.
"While Chinese numbers today were solid, the same could not be said for Australian retail sales data, which came in disappointingly flat," he said.
"The Chinese numbers of late could be considered to be a saviour of sorts, which is helping the market to retain recent gains."
Mr Waterer said all eyes now will be on Tuesday's Reserve Bank of Australia (RBA) board meeting and interest rate decision.
"The Australian dollar will likely remain under pressure in the lead up to Tuesday's RBA rate announcement where it seems only a one in four chance that the RBA holds fire," Mr Waterer said.
"Given that the central bank will not meet in January it would stand to reason that they may take the opportunity to lower rates at this juncture after last month's line-ball decision to hold."
At 1700 AEDT, the Australian dollar was at 85.64 Japanese yen, down from Friday's close of 85.95 yen, and at 79.85 euro cents, down from 80.22 euro cents.
Meanwhile, Australian bond futures prices rose.
JP Morgan interest rate strategist Sally Auld said a string of weaker-than-expected economic data released on Monday increased expectations the RBA would cut the cash rate on Tuesday.
She said demand for bond prices was likely to remain strong heading into the RBA's decision.
"Clearly most people are expecting a rate cut tomorrow so the big surprise would be if they didn't go," he said.
"But if they don't go tomorrow I actually think the market is going to scratch its head and say well there is maybe a chance of a 50 point cut in February."
At 1630 AEDT on Monday, the December 10-year bond futures contract was at 96.935 (implying a yield of 3.065 per cent), up from 96.915 (3.085 per cent) on Friday afternoon.
The December three-year bond futures contract was trading at 97.420 (2.580 per cent), up from 97.380 (2.620 per cent).