A shortage in market activity left the USD/UGX currency pair stuck in what is now a familiar channel in Wednesday’s trading session.
Market participants were slow off their trading blocks, leaving the pair within the 3655/3675 bracket on account of subdued flows on both the supply and demand counters.
We, however, expect activity to pick up amid packed liquidity, and guide the shilling’s near term trading direction. Yields followed a down ward trend in yesterday’s auction to 9.846, 11.304 and 11.516 percent from 10.752, 12.042 and 12.499 percent for the 91, 182 and 364 day papers, respectively.
Dollar posts slight gains as risk appetite remains outstanding
The dollar posted slight gains even as risk appetite remained outstanding, on the back of data released by labor department showing a 2.2 percent rise in core CPI for a third straight month. Gains in the Consumer Price Index, which is a measure of inflation, forms the notion amongst traders that the Federal Reserve may adopt to monetary tightening policies.
The Euro came down yesterday, after release of weaker-than-expected economic data out of the euro zone, creating expectations that the ECB will remain highly accommodative throughout year.
The common currency’s downfall was further propagated by the political uncertainty in Spain. Catalan separatists revolted against the government causing parliament to reject the 2019 draft budget, which pushed the country close to an early national election.