The local Foreign Exchange market was quiet yesterday, with evenly matched trades keeping volatility at a minimum.
Markets

Uganda Shilling fails to preserve previously made gains

The shilling edged lower on Thursday, failing to preserve its previously made gains, on account of persistent dollar buying.

Steady demand for the dollar pushed the USD/UGX pair higher, as importers who had remained on the sidelines for the last few sessions, stepped up to the plate, eroding part of the home unit’s prior session gains.

Ahead of the weekend, the path of least resistance for the shilling still remains lower, given the tenacious dollar appetite and little change in fundamentals.

Greenback slightly lower

The greenback was slightly lower on Trump’s comments that the Fed’s interest rate policy is keeping the dollar at highs and thus harming U.S manufacturers.

The US-China trade stalemate on the other hand, keeps dragging market into the recessionary fears with the spread between the 10-year and 2-year U.S treasury yields currently flattest since December 2018.

The release of July Producer Price Index is awaited today, with expectations of a 2.4% reading against a previous print of 2.3%.

The Euro jumped briefly on Thursday, after reports that Germany is considering ditching its balanced budget goal by issuing new debt to finance a costly climate protection package, the gains were reversed momentarily on Italian political uncertainty.

Markets await German trade balance data today. The GBP/USD pair traded flat at 1.2150 levels yesterday, showing little reaction to UK politics and US-China trade news. Focus shifts to British GDP data due today to provide direction for Cable.