• Mexican Peso strengthens despite judiciary reform and AMLO's diplomatic "pause" with US and Canadian embassies.
• Focus on Banxico’s Q2 report and Fiscal Balance data this Friday amid a light economic calendar.
• USD/MXN spikes near 19.80 due to political worries despite a weakening US Dollar post-Powell dovish Jackson Hole remarks.

The Mexican Peso recovered some ground against the Greenback on Wednesday, yet it remains strongly influenced by political turmoil in Mexico linked to the judiciary reform and President Andres Manuel Lopez Obrador's decision to “pause” relations with the US and Canadian Embassies. At the time of writing, the USD/MXN trades at 19.64, falling some 0.44%.

Mexico’s economic docket remains absent, and traders are bracing for Bank of Mexico’s (Banxico) Q2 report ahead of Friday's reveal of July’s Fiscal Balance. In the meantime, Wall Street trades with losses as speculators await the release of Nvidia’s  fiscal Q2 2025 earnings.

Political developments in Mexico weighed on the Peso after a commission of deputies approved the ruling on the judiciary reform. The reform is expected to be voted on once the new Mexican Congress takes office on September 1.

This and AMLO’s pausing relations with the embassies of Mexico’s largest trading partners triggered a rally in the USD/MXN, which rose over 1.70% and was a whisker of hitting 19.80, even though the US Dollar sustained losses against most G7 FX currencies after Federal Reserve (Fed) Chair Jerome Powell hinted that rate cuts are looming at his Jackson Hole speech.