The upbeat momentum of the USDUGX pair remained sound yesterday, dragging the local unit to new lows.
The shilling has been drifting south versus the greenback in the last couple of days on account of buoyant dollar appetite amid a shortage of foreign currency inflows, high liquidity conditions, as well as bearish sentiments surrounding the local currency.
This remained the case in yesterday’s session, with the pair pushing back above the 3720 hurdle.
Further depreciation of the home unit is still on the cards in the short run, although the downside may be capped somewhat, should the current levels spur some foreign currency.
The dollar fell on Thursday as Treasury yields continued to plumb new lows and investors bet the Federal Reserve would cut interest rates to offset the impact of a spreading coronavirus.
Expectations for a European Central Bank rate cut have also risen: money markets are now pricing in a more than 80% chance of a 10 basis point rate cut in July.
The euro bounced half a percent higher holding at $1.0939on dovish Fed expectations. Focus shifts to German jobs and inflation data and the US Personal Spending number that could influence the pair.
Elsewhere the pound rose to $1.2942. The new round of talks between Britain and the EU is scheduled to start on Monday, but comments from both sides suggest their views on the scope of a free-trade agreement differ greatly.