A persistent lack of dollar demand continued to boost the performance of the shilling against the dollar on Tuesday.

Shilling marginally lower than dollar as market activity picks up

The Uganda shilling was marginally lower against the dollar in yesterday’s session, a day that saw an uptick in market activity on the foreign currency demand counter.

After holding steady for most of the day, corporate and interbank dollar demand in afternoon trading pushed up the USDUGX currency pair to close the day quoted at the 3755/3775.

We see the local currency range bound in the near term, as foreign currency buyers and sellers continue to battle for dominance in the local FX market.

Greenback slips against peers

The U.S. dollar slipped after data showing weak private sector job creation in May strengthened expectations of an interest rate cut from the Federal Reserve.

Fed Chairman Jerome Powell on Tuesday pledged that the central bank will “act as appropriate” to protect the economy from the disruption caused by trade wars, dropping his standard reference to being “patient” in approaching any interest rate decision.

The GBP/USD pair inched up to $1.2687. U.K. Prime Minister Theresa May will step down as leader of the Conservative Party on Friday.

The EUR/USD pair traded higher to $1.1230. The European Central Bank will make its monetary policy decision later on Thursday. Mario Draghi, President of the central bank, is expected to maintain guidance about the possibility of more stimulus.