At 07:00 (AEST), the Australian dollar was buying 72.28 U.S. cents, down from 72.78 U.S. cents on Monday.
"European and U.S. equities fell amid rising Covid cases, warnings from Fed Chair Powell, and further setbacks in U.S. stimulus talks," Westpac Bank economists said in a morning note.
The Aussie followed risk-sensitive currencies in softening on the developments, tipping beyond a weekly low.
At 09:30 (AEST), the local unit was buying 72.29 U.S. cents.
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