MEXICAN PESO SLUMPS AMID HEIGHTENED TENSIONS IN THE SENATE AROUND JUDICIAL REFORM

• Mexican Peso dips over 1%; USD/MXN rises from 19.86 as Senate nears judicial reform vote.
• Foreign institutions and ratings agencies suggest economic risks and potential downgrade if reform is approved.
• Weaker-than-forecast inflation raises likelihood of Banxico rate cut on September 26; US Fed anticipated to cut rates by 25 bps soon.

The Mexican Peso depreciated over 1% against the American Dollar on Tuesday amid increasing tensions surrounding the Senate's approval of judicial reform. At the time of writing, the USD/MXN trades at 20.07 after bouncing off a daily low of 19.86.

The Mexican currency will remain volatile throughout the week as the Senate discusses the judicial reform. On Monday, a news article in El Sol de Mexico said Miguel Angel Yunez Marquez, Senator of the opposition party Partido Accion Nacional (PAN), would be the vote needed to approve the reform.

The Senate will begin formally reading the judicial bill at around 19:00 GMT. It’s expected that it will be voted on Wednesday or Thursday.

Foreign institutions had expressed that the reform could deteriorate the state of law and the country's credibility. Julius Baer warned that ratings agencies could change Mexico’s creditworthiness. They added their name to Morgan Stanley, Bank of America, JP Morgan, Citibanamex and Fitch by warning of the economic and financial impact regarding the approval of judicial reform.