The home unit seesawed between gains and losses in the previous trading session, ending the day unchanged versus its American counterpart.
Early trading saw the shilling advance marginally against the dollar on the back of augmented inflows. As the session progressed foreign currency buyers retreated from the sidelines to take advantage of the low levels to the detriment of the local unit.
Market chatter alludes to range bound trading for the USD/UGX pair, with a bias towards a weaker shilling if the liquidity in the money market space perseveres.
Dollar dips slightly
The U.S. dollar dipped slightly on Wednesday but still remained near one-week highs in step with lower U.S. bond yields and expectations of a rate cut by the Fed later this month.
Furthermore, the International Monetary Fund said in a report that the dollar exchange rates is overvalued by 6% to 12%, while the euro, Japanese yen and Chinese Yuan were seen as broadly in line with fundamentals.
The euro traded towards the lower end of this year’s trading range, weighed down by expectations of easing from European Central Bank and investor’s preference of the higher-yielding U.S. currency. The single currency fell to 1.1200 levels before clawing back up to 1.1230 levels.
Fears of a no-deal brexit continued exerting downward pressure on the GBP/USD pair pushing it to an intraday low of 1.2382. The pair capitalized on dollar weakness later in the session, managing to hold its neck above the 1.2400 handle.