The dollar continued the slide that began in overseas trading late on Friday night as positive economic data buoyed the US currency.
At the close of the local session, the Aussie was trading at US75.83¢ compared with Friday's US77.04¢.
"It does a feel a bit as if the party has come to a fairly abrupt end over the weekend," said Westpac currency strategist Robert Rennie.
The dollar opened sharply weaker yesterday after a US Treasury report released on Friday showed foreigners poured a net $US87.6 billion ($A115.5 billion) into US financial assets in November, four times the amount invested in October.
The data drove the US currency to its biggest one-day gain against the euro in five months, and European officials continued to talk down the euro.
"There's a number of different factors but really, at the end of the day, the trend that we saw in the US dollar through late last week very much put the skids under the Aussie dollar," Mr Rennie said.
"We did see the Aussie holding in very well on Friday afternoon in New York, but with the slight weakening we saw in the housing numbers this morning, the Aussie has given back reasons for optimism."
Housing finance by volume fell 3.9 per cent, in seasonally adjusted terms, to 58,894 units in November, the Australian Bureau of Statistics reported yesterday.
Mr Rennie said the currency's rapid drop had pared back its scope to move higher in the short term.
However, ANZ currency strategist Craig Ferguson said the Aussie was not falling against the US currency with the pace shown by the European currencies. He thought it was destined for a new high between US80¢ and US82¢.
The bond market closed weaker ahead of a public holiday in the US.
Deutsche Bank fixed income strategist David Plank said the softness reflected the tone of US treasuries at the close.
"Treasuries had rallied initially on the weaker industrial production data, but then sold off in response to the gains in equities and the strength of consumer confidence," he said.
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