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MEXICO: Sheinbaum To Discuss Judicial Reform Plans With Lawmakers

MEXICO
  • A more settled backdrop across global markets to start the week, and the associated strength for equity markets, have helped stabilise the Mexican peso. USDMXN briefly rose back above 18.60 on Monday but has since consolidated back around 18.45 and remains close to unchanged on the week.
  • Markets will remain on high alert as President-elect Claudia Sheinbaum is scheduled to meet with lawmakers on Tuesday to discuss judicial reform plans including replacing the current Supreme Court and electing judges. Sheinbaum announced on Monday that she will provide details on her cabinet by Thursday, although it is widely expected the current finance ministry team will remain in place.
  • BBVA believe the uncertain domestic backdrop should prevent USDMXN from recovering previous levels and rebuilding more meaningful carry, and potentially even exposes more upside risk (asymmetrically) for USDMXN, where some positioning references, including IMM, show the market is still long MXN. Sights are on the 19.00 handle and if this level gives way, it will open 19.2083, the 50.0% retracement point of the Nov 26 ‘21 - Apr 9 ‘24 bear cycle. Support to watch moves up to 17.8742, the 20-day EMA.

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