The local Foreign Exchange market was quiet yesterday, with evenly matched trades keeping volatility at a minimum.
Market players witnessed marginal gains on the shilling against the dollar which were momentarily reversed as the session came to a close, leaving the USD/UGX pair flat compared to previous close.
Skewed liquidity in the money market space saw interbank rates trending within the 8%-10% bracket offering some support to the shilling.
We expect the local unit to continue trading within the now familiar band as traders remain in the wait and see stance for fresh market factors to give shilling direction.
Greenback soars near two-week high
The greenback soared near a two-week high against its peers on Monday after U.S. Treasury yields bounced back from recent nadirs amidst buoyancies that major economies would unleash fresh stimulus to revivify slowing global growth.
Falling yields last week caused the two-year/ten-year Treasury curve to invert for the first since time 2007, a sensation widely regarded as a recession indicator that puts the Federal Reserve interest rate deliberations into focus.
The EUR/USD pair was a shade lower yesterday riding on reports that Italy’s 5-Star’s current coalition partner, the far-right league, threatened to propose a motion of no confidence against Prime Minister Giuseppe Conte in an effort to trigger a snap election and capitalize on its growing approval ratings in the polls.
Cable edged marginally lower predominantly due broad based dollar strength. Earlier in the day the British pound rose after Prime Minister Boris Johnson made his first public attempt to renegotiate on the Brexit deal by declaring to the EU that he wants to explore alternatives to the Irish border crisis.