The Australian dollar moved up against its major counterparts in the Asian session on Tuesday, after minutes from the Reserve Bank of Australia's recent meeting showed that members discussed a bigger rate hike at the meeting, but agreed that a 25 basis point move was appropriate. News that China's biggest city plans to gradually reopen after reporting zero community transmission for the third day also supported the currency.
Members considered three options for the size of the rate increase at the present meeting - raising the cash rate by 15 basis points, 25 basis points or 40 basis points, the minutes from the RBA's May monetary policy meeting showed.
Members agreed that raising the cash rate by 15 basis points was not the preferred option given that policy was very stimulatory and that it was highly probable that further rate rises would be required.
Members judged that a 15 basis point increase would also be inconsistent with the historical practice of changing the cash rate in increments of at least 25 basis points.
"An argument for an increase of 40 basis points could be made given the upside risks to inflation and the current very low level of interest rates. However, members agreed that the preferred option was 25 basis points," the minutes said.
Asian markets were broadly higher after Shanghai outlined plans to resume a normal life from June 1 and end a six-week COVID-19 lockdown.
The aussie climbed to 6-day highs of 0.7019 against the greenback and 90.79 against the yen, off its early lows of 0.6966 and 89.79, respectively. The aussie is seen finding resistance around 0.72 against the greenback and 92.00 against the yen.
The aussie touched near 2-week highs of 1.1080 against the kiwi and 1.4893 against the euro, rising from its prior lows of 1.1036 and 1.4980, respectively. The next possible resistance for the aussie is seen around 1.12 against the kiwi and 1.46 against the euro.
The aussie touched a 5-day high of 0.8999 against the loonie, up from a low of 0.8948 hit at 5 pm ET. On the upside, 0.92 is possibly seen as its next resistance level.
Looking ahead, Eurozone GDP and employment reports for the first quarter are due out in the European session.
U.S. NAHB housing market index for May, business inventories data for March, retail sales and industrial production for April will be released in the New York session.