The mid-week trading session saw the USDUGX pair trade sideways as foreign currency demand and supply continue to battle for supremacy in the local FX market.
Foreign currency flows from various sectors matched dollar demand leaving the local unit marooned in a tight range at the close of the session.
We expect the shilling to be on a consolidative mode as market activity remains subdued before charting a new path in the coming weeks.
Greenback registers minimal change
The U.S. dollar was little changed against a basket of currencies after three straight days of gains, trading in narrow ranges ahead of the monetary policy meetings at the ECB later today and Federal Reserve next week.
Worries about slowing growth, especially tied to trade tensions between the United States and China, and weaknesses overseas are likely to encourage the Federal Reserve to cut interest rates next Wednesday for the first time in a decade.
The Euro fell for the fourth straight day on Wednesday after prints from manufacturing PMIs in France and Germany came lower than expected. Today, we have the European Central Bank interest rate decision, with the ECB expected to keep rates on hold. Markets will look to see if the central bank alters its forward guidance.
The pound rose from recent lows after Boris Johnson in his first speech as Prime Minister promised to lead Britain out of the EU on Oct 31 with no ‘’ifs or buts’’, and warned that there will be a no deal Brexit if the European Union refused to negotiate.