NZD/USD holds on to gains as market focuses on RBNZ interest rate decision

NZD/USD held on to gains in early Asian trading on Tuesday. Last week's stronger-than-expected employment report from New Zealand cooled market expectations for an interest rate cut by the Reserve Bank of New Zealand (RBNZ) on Wednesday, further boosting the New Zealand dollar. In addition, since China is New Zealand's largest trading partner, signs that Chinese demand is improving will also push the New Zealand dollar upward.

On the other hand, safe-haven buying could push the U.S. dollar (USD) higher amid rising geopolitical tensions in the Middle East. The market is currently focused on the Bank of New Zealand's interest rate decision and press conference on Wednesday. A hawkish message from NZ Bank Governor Adrian Orr could push NZD/USD higher in the short term.

Elsewhere, traders will keep a close eye on U.S. economic data, which will provide an indication of the Federal Reserve's (Fed) interest rate outlook. Producer Price Index (PPI), Consumer Price Index (CPI) and retail sales data will be released on Tuesday, Wednesday and Thursday respectively.