The Australian dollar climbed to a 28-month high on Tuesday, with the gains underscoring the crucial role iron ore prices are playing in supporting the valuation of the currency.

The Australian dollar jumped to US74.53¢, back to where it traded in August 2018, before retreating a touch to US74.24¢. The advance came as the iron ore price headed towards $US150 a tonne, after hitting $US146.93 a tonne overnight in the spot market, according to Fastmarkets MB.