By Jamie McGeever

A look at the day ahead in Asian markets from Jamie McGeever.

The Reserve Bank of Australia delivers its latest interest rate decision on Tuesday, undoubtedly the centerpiece event for Asian and Pacific markets but potentially of interest to U.S. Fed watchers too.

The RBA is expected to keep its benchmark cash rate on hold at 3.85% even though inflation is running well above target, with economists united in thinking rates will rise further this year but divided on when and how high they will peak.

Sound familiar?

This is the general path investors think the Federal Reserve will take: pause or 'skip' on another rate hike next week, but leaving the door open to tightening again later in the year if, as the consensus suggests, the economic data warrant it.

This would not be the RBA's first pause in its tightening cycle. It raised rates last month after pausing in April, confounding financial markets and a majority of economists who were expecting the central bank to stay hold.

Interest rate futures markets currently attach a 66% chance the RBA pauses, and a one-in-three chance it raises the cash rate by a quarter point to 4.10%. Rates are seen peaking at around 4.20% this year, according to current pricing.

This isn't too dissimilar to current pricing around the Fed - a 75% probability of staying on hold next week and a 50% chance of raising by a quarter point in July.

Holders of Australian assets will be pay particularly close attention to policymakers' statement and RBA governor Philip Lowe's press conference after the decision for guidance. Fed watchers will too, as it's a position U.S. central bankers might find themselves in soon enough.

After sliding to a six-month low of $0.6450 last week, the Australian dollar goes into the meeting on a slightly stronger footing, last trading just above $0.66.

Asian markets more broadly could struggle for direction on Tuesday after a fairly mixed global session on Monday - Wall Street gave back gains to close in the red, although U.S. mega tech rose and Apple briefly hit a new record high; bond yields fell, but oil prices rose.

Here are three key developments that could provide more direction to markets on Tuesday:

- Australia interest rate decision

- Australia current account (Q1)

- Japan household spending (April)

(By Jamie McGeever)