Mexican peso falls significantly

Political unrest associated with the newly passed judicial reform on Friday caused the Mexican peso to weaken against the US dollar. Investors are still apprehensive about the reforms, which could impact Mexico’s creditworthiness and jeopardize the rule of law. The USD/MXN is up 0.96% at 19.98.

The Mexican currency is typically supported by positive market sentiment. Following the Senate’s passage of a bill to make constitutional amendments “unchallengeable,” politics are limiting the Peso’s progress. If it were approved, the judiciary’s ability to block measures proposed by Congress would be limited. The Mexican Congress approved a judiciary reform that permits judges and magistrates to be chosen by popular vote in September. After citizens contested the amendments to the Mexican Constitution, two federal judges suspended these improvements. Alejandro Lopez Gonzalez, the director of the official gazette, and Mexican President Claudia Sheinbaum were directed by one of the justices to delete the decree confirming the judicial reform from the gazette and decrease the publication. Sheinbaum, however, violated a federal judge’s order by declaring, “We are not going to lower the publication.” Since Donald Trump has often stated that he would impose more than 200% tariffs on cars made and imported from Mexico, concerns about his success in the US election could be weighing on the Mexican peso in the interim.

According to data, core shipments have decreased in four of the last five months reported, and US durable goods orders fell in September for the second consecutive month.

The final result of the University of Michigan (UoM) Consumer Sentiment for October recently exceeded forecasts and the reading from the previous month. Expectations for inflation were reduced for the first year and remained the same for the next five. Market movers for the daily digest: Political unrest causes the Mexican Peso to decline

• According to Monex, the Bank of Mexico (Banxico) may not be able to reduce borrowing costs by 50 basis points (bps) if Mexico’s inflation report for the first 15 days of October is mixed. Banxico’s next meeting is scheduled for November 14.
• US durable goods orders fell 0.8% month over month in September, falling short of -1% forecasts and remaining flat from the previous month.
• October’s US Consumer Sentiment increased to 70.5 from 69, which was better than anticipated.

According to the same survey, expectations fell from 2.9% to 2.7% after a year and stayed at 3% for five years.

• Investors anticipate 49 basis points of Fed easing by the end of the year, according to data from the Chicago Board of Trade via the December Fed funds rate futures contract.

Quick Overview

1. Judicial reforms restrict the judiciary’s capacity to contest constitutional amendments, depreciating the Mexican Peso in the face of political unpredictability.
2. President Sheinbaum’s disregard for a federal judge’s suspension order raises more questions regarding economic stability and the rule of law.
3. The Peso is under pressure from Mexico’s internal political changes, exacerbated by worries about possible US tariffs under the Trump administration.

Stay tunes and Happy trading Turtles……!!!!!!!