Stephen Kaboyo, Founder and Managing Director Alpha Capital Partners

The local currency hit pockets of volatility in early trade but price action became less intense towards the end of week as demand subsided. Mid-month tax payments did little to support the unit. Trading was in the areas of 3700/3710.

In the fixed income space, trading was limited to the secondary market as there was no schedule primary market auction.

The regional markets saw the Kenya shilling maintain a stable stance, firming slightly and clinging on early week gains on matched demand and supply conditions. The unit quoted at 108.45/65.

Global markets
In the global markets, the US dollar inched higher while Wall Street slipped, as investors locked in recent gains amid rising concerns about the resurgence of Covid-19.
Markets also reacted to the downbeat comments from the US treasury, that a stimulus deal was unlikely before Nov 3 vote, this led to a profit taking drive.

In commodities markets , oil prices strengthened as OPEC and its allies were seen complying with a pact to cut oil supply even as concerns loomed that recovery in fuel demand will likely stall on account of soaring global Covid-19 infections. Brent crude traded at US$43.39 a barrel.

Outlook for the shilling indicate that the unit will retain a firm stance ahead of the Monetary Policy meeting, an event that will keep trading on the cautious side.
Overall, Bank of Uganda is likely to maintain a loose monetary policy stance as growth concerns are expected to dominate policy debates.