The Uganda shilling continued to trade firmly against the dollar clinging onto previous gains. The domestic unit showed strength against its U.S. counterpart amid tight liquidity conditions.
Dollar appetite from corporate and interbank players remained fairly low throughout the day to allow the home unit close with its right foot forward.
We expect the USDUGX pair to continue to fight it out within familiar ranges pending any news that could tilt the scale to either side.
Yields in yesterday’s auction followed a downward trend with the 3yr and 10yr papers falling to 15.150 and 15.750 percent from 16.625 and 17.000 percent respectively.
Greenback inches up as Federal Reserve’s last meeting revives expectations
The dollar inched up after minutes from the Federal Reserve’s last meeting revived expectations for a possible U.S. rate hike this year while investors shifted their focus back to trade issues for fresh directional cues.
The pound dipped to $1.3031 pulling back further from a near three-week high of $1.3109 touched the previous day. Sterling took a knock after three lawmakers defected from British Prime Minister Theresa May’s ruling Conservative party in a move that could undermine her Brexit strategy.
The cable was also weighed after Fitch Ratings said on Wednesday it may downgrade the United Kingdom’s “AA” debt rating based on growing Brexit uncertainty.
The euro was little changed at $1.1337 after being nudged off a two-week high of $1.1371 earlier as the Fed minutes were slightly more hawkish-than-expected.
The pair could find takers in Europe if the Eurozone PMIs beat expectations, alleviating recession fears. ECB minutes will likely sound dovish, but the delay in the rate hike has been priced in.