The New Zealand dollar rose broadly in Asian trading on Tuesday, climbing to its highest level in seven weeks against the US dollar after New Zealand reported stronger-than-expected inflation data for the second quarter.

The figures highlighted mounting inflationary pressures facing policymakers at the Reserve Bank of New Zealand (RBNZ), reinforcing market expectations that the central bank will continue normalizing monetary policy.

The data also strengthened expectations that the RBNZ will raise interest rates at its September meeting, a move that would mark the country's second rate hike since the beginning of the year.

The Price

• The New Zealand dollar rose 0.6% against the US dollar to 0.5873, its highest level since June 5, after opening the session at 0.5838. It touched an intraday low of 0.5832.

• The currency ended Monday down less than 0.1% against the US dollar, marking its second loss in the past three sessions, as escalating military tensions between the United States and Iran boosted demand for safe-haven assets.

New Zealand inflation

Statistics New Zealand reported on Wednesday that the annual Consumer Price Index (CPI) rose 4.1% in the second quarter of 2026, the highest reading since the fourth quarter of 2023. The figure exceeded market expectations of a 4.0% increase and followed a 3.1% rise in the first quarter.

On a quarterly basis, CPI increased 1.5% in the second quarter of 2026, up from 0.9% in the previous quarter and above market expectations of a 1.4% increase.

The data showed that New Zealand's annual inflation rate remained above the RBNZ's medium-term target range of 1% to 3% for a third consecutive quarter.

The renewed inflationary pressures have strengthened the case for the Reserve Bank of New Zealand to continue tightening monetary policy and raise interest rates in the near term.

New Zealand interest rates

• Following its July meeting, the Reserve Bank of New Zealand said further interest rate increases may be required, although the timing and magnitude of any future moves will depend on incoming economic data, inflation trends, and the strength of economic activity.

• Following the inflation data, market pricing for a 25-basis-point rate hike at the September meeting increased from 85% to 95%.

• Investors will closely monitor upcoming New Zealand economic data on inflation, employment, and economic growth to further refine expectations for the central bank's policy path.

Analysis and commentary

Satish Ranchhod, Chief Economist at Westpac, said the inflation data was not as alarming as the Reserve Bank of New Zealand may have feared, particularly given the continued easing in core inflation, "but headline inflation remains elevated."

Ranchhod added that Westpac expects the Reserve Bank of New Zealand to raise its official cash rate at both the September and December policy meetings.

Oil prices climbed on Monday after US President Donald Trump warned Iran it would pay a "heavy price" for the deaths of three American soldiers, while Yemen's Houthi movement announced a maritime blockade on Saudi Arabia, heightening concerns over global energy supplies.

Global benchmark Brent crude rose about 1.3% to settle at $89.22 a barrel, while US West Texas Intermediate crude gained 0.9% to close at $83.23 a barrel. Oil prices have now surged roughly 20% since the start of the month as military tensions between the United States and Iran intensified.

"Every time Iran kills an American soldier, it will pay many times over," Trump said in a post on Truth Social.

He added that his instructions had been conveyed to Secretary of War Pete Hegseth, Chairman of the Joint Chiefs of Staff Daniel Caine, and senior military commanders.

Brent crude had jumped nearly 4% overnight to trade above $90 a barrel after the United States confirmed that three of its service members were killed during the latest clashes with Iran. Prices later trimmed gains following comments from Iranian Foreign Ministry spokesperson Esmaeil Baghaei, who suggested negotiations with Washington could resume if they serve Iran's national interests.

In a separate development, the Iran-backed Houthi movement announced a maritime blockade on Saudi Arabia, a move that could further disrupt oil supplies already affected by Iranian attacks on tankers transiting the Strait of Hormuz.

The Houthis also reiterated threats to shut down the Bab el-Mandeb Strait, which connects the Red Sea to global markets and is one of the world's most important routes for oil shipments and international trade.

Saudi Arabia has been rerouting millions of barrels of oil per day through a pipeline leading to a Red Sea export terminal, providing global markets with a vital alternative outlet during the conflict between the United States and Iran.

Meanwhile, the United States carried out airstrikes inside Iran for a ninth consecutive night in response to repeated attacks on oil tankers passing through the Strait of Hormuz, as Tehran seeks to force vessels to transit through its territorial waters. According to the report, the attacks have killed two sailors and injured more than 12 people so far this month.

A refined products tanker off the coast of Oman was also struck by a projectile over the weekend, triggering a fire onboard, according to the UK Maritime Trade Operations (UKMTO), which said the crew safely abandoned the vessel before being rescued by a tugboat.

The International Maritime Organization (IMO) identified the tanker as the Malta-flagged Kavomaleas.

At the same time, Iran continued retaliating against US strikes by launching missiles toward Washington's allies in the Middle East. Over the weekend, it targeted a power generation and desalination plant in Kuwait for the second time in two days, according to Kuwait Times. Kuwait relies heavily on such facilities for its drinking water supply.

For consumers, the average US gasoline price climbed back to $4 a gallon as US crude prices rose about 18% this month, according to AAA data. That matches the level recorded on June 17, when the United States and Iran signed a temporary agreement aimed at reopening the Strait of Hormuz and halting the fighting.

Amrita Sen, founder and director of research at Energy Aspects, said a sharp slowdown in shipping through the Strait of Hormuz, combined with declining global inventories, could push oil prices above $100 a barrel.

"The market is still treating the situation with a remarkable degree of calm despite the sharp rise in oil prices," Sen told CNBC.

Gold prices were little changed on Monday as investors assessed developments in the conflict between the United States and Iran and their impact on oil prices, while Federal Reserve officials signaled that interest rates may need to rise to curb inflationary pressures.

Spot gold fell 0.2% to $4,006.74 an ounce, while US gold futures for August delivery declined 0.1% to $4,015.90 an ounce.

Middle East developments

"Gold continues to move inversely to oil prices, while market participants closely monitor developments in the Middle East," said Giovanni Staunovo, an analyst at UBS.

US forces continued their strikes on Iran for a ninth consecutive day, while concerns mounted over shipping through the Strait of Hormuz after Iran said two oil tankers were hit by explosions that left them disabled.

Oil prices pared earlier gains after reaching their highest levels in more than a month, following comments from Iran's Foreign Ministry spokesperson suggesting that negotiations with the United States could resume if they serve the country's national interests.

Higher oil prices add to inflation concerns and strengthen expectations that interest rates will remain elevated for longer. Although gold is traditionally considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding metal.

Federal Reserve policy

On the monetary policy front, Cleveland Federal Reserve President Beth Hammack joined a growing number of Fed officials who believe interest rates may need to rise to address persistent inflation, setting the stage for a heated debate at the central bank's next meeting and possible dissent during the second meeting chaired by Kevin Warsh.

According to the CME FedWatch Tool, markets raised the probability of a Federal Reserve rate hike in December to 80%, up from 73% last week.

"We expect a weaker dollar to support gold prices over the next six to 12 months, with the metal likely to climb back above $5,000 an ounce," Staunovo added.

Wall Street's major indexes advanced on Monday, led by a rebound in semiconductor stocks, as investors looked ahead to a crucial wave of earnings from major technology companies that have been the primary driver of the AI-fueled rally in US equities.

The pace of second-quarter earnings reports is set to accelerate later this week, with results due from Alphabet (Google), Tesla, Intel, and IBM.

Investors are also closely watching earnings from Intel and Texas Instruments for signs that the semiconductor industry can regain momentum following its recent sharp correction.

Heavy spending on AI infrastructure by hyperscale cloud providers has been one of the biggest forces behind this year's market gains, boosting semiconductor stocks and other companies benefiting from the rapid expansion of artificial intelligence investments, helping Wall Street reach record highs.

However, last week's selloff raised concerns that the market's previous gains may have become overstretched.

Semiconductor stocks rebound after entering bear market

The Philadelphia Semiconductor Index (SOX) closed Friday more than 20% below its record high reached in late June, officially confirming its entry into bear market territory. The index, however, rebounded 2.5% during Monday's session.

"The margin for error in the market has become much smaller at this stage, and any event or earnings report could easily push stocks lower," said Jack Haire, Chief Investment Officer at GuideStone Funds.

"As we move into the second half of the year, investor expectations are significantly higher than they were before," he added.

According to LSEG data, analysts now expect S&P 500 companies to deliver 26% year-on-year earnings growth in the second quarter, up from an earlier forecast of 23.7%.

As of 9:50 a.m. ET, the Dow Jones Industrial Average was up 78.39 points, or 0.15%, at 52,224.81.

The S&P 500 gained 44.81 points, or 0.60%, to 7,502.50, while the Nasdaq Composite rose 234.45 points, or 0.92%, to 25,754.69.

Technology stocks lead gains

Micron Technology led gains among semiconductor stocks, climbing 5.1%, while SanDisk advanced 5.4%.

Alphabet rose 3.4% after a report said the Google parent is developing new chips to power its own artificial intelligence models.

The information technology and communication services sectors led gains among the S&P 500's major sectors.

The rebound came despite last week's decline in US equities, even after softer-than-expected inflation data eased concerns about a potential Federal Reserve rate hike in July and major US banks kicked off the earnings season with strong results.

According to CME Group's FedWatch Tool, markets are currently pricing in roughly a 15% probability of a 25-basis-point rate hike at the Federal Reserve's July meeting.

Geopolitical risks remain in focus

Investors also continued to monitor developments in the conflict involving the United States, Israel, and Iran following the latest escalation in the nearly five-month-long war, which has renewed concerns about inflationary pressures.

Meanwhile, the Iran-aligned Houthi movement in Yemen announced a maritime blockade on Saudi Arabia, opening a new front in the Middle East conflict and increasing risks to global energy supplies and trade routes.

Among individual stocks, Domino's Pizza gained 3.6% after the company reported quarterly revenue that narrowly exceeded Wall Street expectations.

In the broader market, advancing stocks outnumbered decliners by 1.14-to-1 on the New York Stock Exchange and by 1.11-to-1 on the Nasdaq.

The S&P 500 recorded eight new 52-week highs against one new low, while the Nasdaq Composite posted 31 new highs and 55 new lows.