The Australian dollar climbed against its key counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia kept its interest rate on hold, while estimating a pick-up in inflation on strengthening economy.

The board of the Reserve Bank of Australia, governed by Philip Lowe, maintained the cash rate at 1.50 percent. The bank had reduced the rate by 25-basis points each in August and May last year.

The bank noted that the low level of interest rates is continuing to support the Australian economy.

The bank removed its rhetoric on inflation from the statement, which previously suggested that inflation would stay low for some time.

"Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time," it added.

The currency has been already trading higher during the session, buoyed by better-than-expected Australia retail sales for October and China services PMI for November.

Survey results from IHS Markit showed that China services activity expanded in November to the most in three months. The services Purchasing Managers' Index climbed to 51.9 from 51.2 in October. Data from the Australian Bureau of Statistics showed that Australia retail sales rose a seasonally adjusted 0.5 percent on month in October, coming in at A$26.0.51 billion.

That beat expectations for an increase of 0.3 percent following the upwardly revised 0.1 percent gain in September.

The aussie climbed against its most major counterparts on Monday, as most Asian stocks rose following the passage of U.S. tax bill in the Senate. The currency added 0.04 percent against the yen, 0.05 percent against the euro and 0.3 against the kiwi for the day.

The aussie reversed from an early low of 0.9627 against the loonie, rising 0.6 percent to a 4-day high of 0.9689. The next possible resistance for the aussie-loonie pair is seen around the 0.98 region.

The aussie advanced to 0.7652 against the greenback, its strongest since November 13. This marks a 0.7 percent advance from a low of 0.7597 hit at 5:00 pm ET. Continuation of the aussie's uptrend may see it challenging resistance around the 0.78 mark.

The aussie strengthened to a 12-day high of 1.5514 against the euro, from a low of 1.5617 hit at 6:00 pm ET. Further uptrend may take the aussie to a resistance around the 1.54 zone.

The aussie climbed to near a 3-week high of 86.10 against the yen, after falling to 85.39 at 5:00 pm ET. If the aussie-yen pair extends gain, it may challenge resistance around the 87.00 mark.

The latest survey from Nikkei showed that Japan's services sector continued to expand in November, albeit at a slower pace, with a PMI score of 51.2.

That's down from the 26-month high of 53.4 in October, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

The Australian currency bounced off to 1.1090 against the kiwi from a low of 1.1050 hit at 7:15 pm ET. Further uptrend may take the aussie to a resistance around the 1.12 level.

In today's events, Eurozone retail sales for October and PMIs from major European economies are due in the European session.

In the New York session, U.S. and Canadian trade data for October, ISM non-manufacturing composite index and Markit's U.S services PMI for November are slated for release.

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