Statistics released by Beijing painted a picture of rising inflation and slowing domestic growth, prompting worries that China's demand for Australian exports would weaken. At 4.47pm AEDT, the Aussie fetched $US1.0224 compared with $US1.02248 on Friday.
Given the weak Chinese data, the Aussie is likely to fall further even if the Reserve Bank of Australia gives up its rate cutting bias, said Ray Attrill, a foreign exchange strategist at National Australia Bank.
"We believe the Australian dollar can leak lower again without the need for domestic data to turn for the worse and RBA rate cut hopes to revive, in particular if the US dollar continues to trade with a steadier tone," Mr Attrill said.
"Metals prices are one fundamental driver we believe could be a catalyst for fresh weakness, all the more so after a set of relatively soft China February data."
Traders are betting a 24 per cent chance that the RBA will ease interest rates by 25 basis points when policymakers gather next month and are pricing for 22 basis points of cuts over the year ahead.
"We anticipate US$1.01 will continue to offer good support, but the Australian dollar risks temporarily breaking to the downside, because of the decline in base metal commodity prices over the last month, the firmer US dollar and dampening impact the yen are generating on non-Japan Asian currencies," said Chris Tennent-Brown, a strategist at CBA.
For the week ahead, local employment figures will be the highlight and traders are also watching out for business and consumer confidence and home loans data.
"We expect the unemployment rate to have held steady in February at 5.4 per cent, with the employment-to-population ratio treading water too, which implies a net employment gain of 25,000 positions," said Stephen Walters, the chief economist at JPMorgan in Sydney.
"While we are calling for relative stability in the key labour market rates in February, we do not see signs of a genuine labour market and income recovery yet."