Australian dollar begins downward slide as economy slows
The Australian dollar has slipped as traders were cautious ahead of an expected interest rate cut by the central bank while disappointing economic data from top trading partner China also weighed.
The Australian dollar fell for the first time in nine sessions to a low of 69.42 US cents.
The Aussie had climbed 1.4 per cent last week, clocking its second straight weekly rise largely led by a subdued US dollar.
The gains are unlikely to be sustained though as the US Federal Reserve was no longer expected to ease policy as aggressively as previously thought while a thaw in a heated Chinese-US trade conflict has also revived the greenback.
The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.
"Despite a marginal improvement in trade sentiment supporting risk, the short-term AUD outlook remains more neutral ahead of the RBA on Tuesday," analysts at ANZ said in a note.
The Reserve Bank of Australia (RBA) is widely expected to reduce its cash rate again at its July 2 board meeting to a new all-time low of 1.0 per cent.
Rates could dip as low as 0.75 per cent by the middle of next year.
RBA Governor Philip Lowe will follow up the rate decision with a dinner speech on Tuesday which is likely to provide further clues about the future direction of monetary policy.
Another drag on the Aussie was signs of strains in the Chinese economy with data showing the country's factory activity unexpectedly shrank in June as domestic demand and exports faltered.
China is Australia's No.1 trading partner and the biggest buyer of the country's iron ore and coal, meaning a slowdown would augur poorly for Australia's already struggling economy.