The Uganda shilling continued to trade firmly against the dollar clinging onto previous gains.

Local unit edges higher against foreign counterpart

The Uganda shilling edged higher against its foreign counterpart on Monday due to ebbing dollar demand from interbank players.

In what was a relatively active day on the FX counters, the USD/UGX pair found comfort at the 3690/3710 levels from Fridays close of 3700/3720. Today a similar narrative is likely to ensue alongside muted activity on the demand counters.

There will be a T-bill auction tomorrow with Ugx 195bn on offer for the 91day, 182day and 364day papers. We expect the rates to hold at current levels.

Dollar held back by stronger yen                                                                                          

The U.S dollar dipped in yesterday’s session, held back by a stronger yen on the back of safe-haven demand as weak data from China fuelled concerns that the world’s second largest economy is slowing. The slump is expected to continue although at a moderate pace, amid expectations that the Federal Reserve will adopt a slower pace of monetary policy tightening. The U.S. releases PPI reports today.

The EUR/USD ticked higher, trading at 1.1460 lines, shrugging shocking German Wholesale Price Index that declined 1.2% and Eurozone industrial production data that fell 1.6%, much worse than the forecast of a 0.3% gain. Today, ECB President Draghi will testify about the ECB annual report. The GBP/USD pair traded as high as 1.2900, a level last seen two months ago.

Of most importance today for the sterling is the Brexit vote by U.K members of Parliament, a vote down of May’s Brexit deal is probable, nonetheless the pound continued to add to gains against the greenback amid falling expectations the UK will leave the European Union without a trade deal.