• Mexican Peso weakens after INEGI reports sharp declines in June Retail Sales with inflation concerns looming.
• US Dollar strengthens following downward revision of Nonfarm Payrolls by 800K.
• Fitch warns of rising debt risks for Mexico’s next administration with potential impacts on sovereign rating amid judicial reform controversy.

The Mexican Peso depreciated over 1.20% against the US Dollar in early trading on Wednesday as traders digested Mexico’s dismal Retail Sales report and awaited the release of a revision of US employment figures. The USD/MXN trades at 19.21 after bouncing off a daily low of 18.92.

Wall Street traded in the green, portraying optimism among investors. The Greenback advanced as the Bureau of Labor Statistics (BLS) revised the Nonfarm Payrolls (NFP) figures downward by 800K.

Meanwhile, on Tuesday, the Instituto Nacional de Estadistica Geografia e Informatica (INEGI) revealed that Retail Sales in June plunged in monthly and annual figures. In addition to this data, August’s mid-month inflation data is expected to tick up in core figures, while the headline is foreseen edging lower.

In the meantime, Fitch’s rating said that Mexico’s upcoming administration will face a growing debt above 51% of the Gross Domestic Product (GDP), which could affect the country’s sovereign rating.

The agency noted, “The fiscal strategy and governance reforms of the Sheinbaum government will be key factors for Mexico's rating.”

Fitch analysts added that judiciary reform “would negatively affect Mexico’s overall institutional profile, but the severity of their impact could become clearer once approved and implemented.”

Meanwhile, unions representing Mexico’s judicial workers launched an indefinite nationwide strike last Monday against President Andres Manuel Lopez Obrador's proposed judiciary reform.

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