The Australian dollar showed mixed trading against its major counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia raised its key interest rate by 50 basis points and signalled more steps in the process of normalizing monetary conditions in the period ahead.

The RBA decided to lift the cash rate to 0.85 percent from 0.35 percent, exceeding economists' expectations.

The board also increased the interest rate on Exchange Settlement balances by 50 basis points to 75 basis points.

The RBA said it would take further steps in the process of normalizing monetary conditions over the months ahead.

"The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time," it added.

Asian stock markets are trading mostly lower as treasury yields spiked up on rising prospects of aggressive policy tightening by the U.S. Federal Reserve to combat inflation.

The aussie retreated to 0.7166 against the greenback, from a 4-day high of 0.7245 hit at 12:30 am ET. This may be compared to a multi-day low of 0.7159 seen earlier in the session. If the aussie falls further, 0.70 is possibly seen as its next support level.

The aussie firmed to 96.11 against the yen, its highest level since June 2015. The aussie may possibly face resistance around the 98.00 level.

The aussie pulled back to 1.4894 against the euro, from near a 5-week high of 1.4759 touched at 12:30 am ET. The aussie is seen finding support around the 1.50 level.

The aussie rallied to 1.1162 against the kiwi, a level unseen since August 2018. The currency is likely to face resistance around the 1.14 level.

Looking ahead, U.K. services and German construction PMIs for May are due out in the European session.

U.S. and Canadian trade data for April, Canada Ivey PMI for May and U.S. consumer credit for for April will be released in the New York session.

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