The Australian dollar is down sharply against the greenback, falling back below 75 US cents, as the US dollar gains after an influential Federal Reserve official expressed confidence that rising wages would help revive domestic inflation.

At 0635 AEST on Tuesday, the Australian dollar was worth 75.98 US cents, down from 76.11 US cents on Monday.

New York Fed president William Dudley on Monday said labour market tightening should help drive up inflation, which offset concerns by some investors that stubbornly low inflation would not allow policy-makers to raise rates further the rest of this year.

The local currency is higher against the yen and the euro.

AAP

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