• Mexican Peso falls 0.60%, continuing its decline for a second consecutive day.
• Political turmoil and judicial reform concerns in Mexico lead to over 10% depreciation since June 2 election.
• A softer US inflation report moderates further Peso losses, yet political uncertainties maintain USD/MXN near multi-month highs.

The Mexican Peso extended its losses for the second straight day on Wednesday against the US Dollar after hitting a 14-month low of 18.99, as traders remained nervous about controversial reforms to the Mexican constitution. Meanwhile, a softer-than-expected US inflation report capped the Mexican currency fall, yet it remains trading with losses of 0.65% near18.66.

Mexico’s political turmoil has weakened the Mexican currency by more than 10% following the June 2 general election. Investors are nervous about President Andres Manuel Lopez Obrador’s (AMLO) imminent judicial reform in September, which would allow the popular election of judges and magistrates of the Supreme Court.

The dissolution of key autonomous bodies, including the INAI and the Electoral Institute (INE), poses a significant threat to Mexico's hard-won democracy, which has been in place since the 1990s. If implemented, this move could potentially disrupt the democratic processes that have been the cornerstone of Mexico's political and economic stability.

During his morning press conference, President AMLO belittled the markets. According to Reuters, he said, "They are wrong, respectfully, if they are thinking that we are going to go back on reforming the judiciary, which is rotten, which is dominated by corruption, just because there is financial nervousness."

The USD/MXN hit a new multi-month high of 18.99 during the European session amid political and economic uncertainty surrounding Mexico.

AMLO’s pending reforms will be submitted to the newly elected Mexican Congress once it takes office in September, one month before President-elect Claudia Sheinbaum begins her six-year presidency.

Across the border, May’s US inflation was softer than expected, which weakened the Greenback against a basket of six currencies, but not against the Peso. At 18:00 GMT, the US Federal Reserve (Fed) is expected to deliver its monetary policy decision and its economic projections.