Daily Market Commentary 23rd February 2020

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The rise in interest rates continue to dominate markets at the beginning of a new trading week. US Bond yields are steadily on the rise and the debate over the cause continues. Stronger economic growth and demand could be the driver of rising rates, but the massive expansion of the Central Banks balance sheet may have something to do with it? Either way, the rise in rates will make the cost of debt service, testing capital and investment and lead to higher cost-of-living prices.

US Markets keenly await the Bi-annual testimony of the Federal Reserve Chairman in front of the Senate Banking Committee, Tuesday. He will be closely examined on the State of the economy and the rising interest rates. The initial support for the US Dollar has all but disappeared, with the EUR jumping to 1.2150, while the GBP surged to 1.4080. Commodity prices continue to rally, dragging the associated currencies along for the ride. The AUD has broken above 0.7900, while the NZD pushed up to 0.7330.

Central banks interpretations on the rise in bond yields may answer some questions, with the Fed Chairs testimony and the RBNZ rate decision. Interest rates are set to dominate the narrative this coming week.

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