Home > Latest News > War, A Falling Dollar ,A Rise In Oil Prices & Rate Uncertanity Retailers Are Concerned

War, A Falling Dollar ,A Rise In Oil Prices & Rate Uncertanity Retailers Are Concerned

Already under pressure and facing shrinking sales CE, audio and appliance retailers in Australia, are facing a new problem today, a falling dollar and rising petrol prices following the decision by Israel to go to war with Hamas.

The week the Aussie dollar dropped to its lowest level in 11 months, briefly dipping below US63 cents while overnight oil prices started to climb.

Brent crude, the international benchmark, climbed by $3.51 a barrel to $135.38.

While Israel and Palestinian territories are not oil producers, the Middle Eastern region accounts for almost a third of global supply with Iran being a major supplier.

Retailers in Australia have told ChannelNews that the upcoming Black Friday sales are “critical,” and the success or failure of these sales will determine where the market goes running into the upcoming holiday period.

Amazon’s Prime Day Sale is about to kick off and retailers are set to watch whether the big online retailer is able to grow sales.

In this picture taken on August 5, 2023, a tanker sails in Arabian Sea off the coast in Mumbai. (Photo by Sebastien BERGER / AFP) (Photo by SEBASTIEN BERGER/AFP via Getty Images)

Distributors are telling ChannelNews that the falling dollar will result in increased prices for goods in the New Year if it keeps falling.

Topping this off the Reserve Bank’s efforts to tame inflation through its preferred weapon of higher interest rates could see a further rise in interest rates on Melbourne Cup Day if the dollar keeps falling.

Like many things in economics, a softer dollar isn’t all good with a fall affecting many households and businesses that are currently looking for stability.

The exchange rate is likely to be considered by the RBA board when it decides whether to jack up interest rates again in early November.

Saturday’s strike and Israel’s subsequent declaration of war threaten to unnerve markets, while a jump in crude oil from the start of Asian trade adds to concern about elevated inflation in Australia and this is what retailers fear is a problem heading to a peak buying period.

The yen and dollar — both haven currencies — strengthened as the trading week began following the deadly attacks with suppliers in Australia primarily hedging in the US dollar.

“Geopolitical crises in the Middle East have usually caused oil prices to rise and stock prices to fall,” said Ed Yardeni, president of Yardeni Research “Much will depend on whether the crisis turns out to be another short-term flare-up or something much bigger like a war between Israel and Iran.”

Gonzalo Lardies, senior equities fund manager at Andbank

“This will add more uncertainty to markets, with inflation and growth taking a step back and geopolitical risk-taking centre stage. We could expect a spike in volatility, with short-term fixed income becoming again a safe haven, while in cyclical sectors will be in the spotlight.”

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