The Australian dollar has slipped amid pressure from weaker commodity prices, global volatility and signs the US Federal Reserve may tighten its monetary policy.

At 7 a.m. on Tuesday, the local unit was trading at 70.84 US cents, down from 70.96 cents on Monday.

The currency fell to 70.51 US cents earlier in the session.

Global equity markets and commodity prices tumbled overnight and ANZ senior FX manager Sam Tuck says the uncertainty caused torrid trade for the local unit.

“Ultimately, the Australian dollar is tied to this global credit market fear cycle,” he told AAP.

“The pressure looks set to continue in the medium term.”

NAB chief economist Ivan Colhoun said divergences in monetary policy among major economies had also caused significant confusion and put pressure on commodity currencies like the Australian dollar.

“The net effect to date has been low inflation and interest rates, a stronger US dollar, weakness in commodity prices and non-US dollar currencies and lower unemployment in advanced economies,” Colhoun said in a statement.

“Either way, in the near term, there remains pressure on the Australian dollar, which we see trading in the US$0.66-0.70 region this year.”

The main local risk event on Tuesday will be the NAB business confidence survey.

AAP

Want more Inside Retail? Subscribe to Inside Retail Weekly now and get our premium print publication delivered to your door every week.