Investing.com – The Mexican peso faced pressure as it approached a recent peak of 18.60 in overnight trade in Asia. The move comes after Mexico's president-elect, Claudia Sheinbaum, announced that judicial reform would be an early topic of the new congress in September.
The peso has already weakened by 8% due to fears that the Morena party, which performed strongly in recent elections, will implement constitutional reforms that could negatively impact the market. Investors in North America are expected to view this potential agenda negatively, which could lead to a further decline in the value of the peso as markets there open today.
Analysts at ING have been bullish on the peso for a long time, but said they will remain cautious now.
Analysts also said the popular long-term interest trade could face more challenges on Friday when the Bank of Japan meets to set policy. No change in interest rates is expected, but officials could provide some clues about when the tightening will begin, as the Bank of Japan's monthly purchases of Japanese government bonds could be reduced from JPY6 trillion to JPY5.5 trillion or even JPY5.0 trillion. This may help the yen.
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