• Mexican Peso strengthens as fears of judiciary reform approval fade despite Banxico's dovish stance.
• Opposition from 43 senators reduces chances of judiciary reform approval, easing political concerns in Mexico.
• Banxico’s dovish stance justified by declining inflation, while Business Confidence slightly improves but remains below 50.

The Mexican Peso staged a comeback against the Greenback on Monday. Fears that the judiciary reform would be approved faded after 43 opposition senators reiterated their vote against it. The USD/MXN trades at 19.86, down by 0.42%.

The USD/MXN pair continues to be driven by political issues. However, the latest inflation report justified the Bank of Mexico's (Banxico) dovish stance as headline and core figures dipped on an annual reading.

Other data showed that Business Confidence improved slightly but remained below the 50 threshold.

In the meantime, Julius Baer warned that rating agencies could change Mexico’s creditworthiness as soon as next year if the judicial reform is approved. Erini Tsekeridou, a fixed-income analyst, said, “Although the economic impact is not yet fully clear, markets are concerned about the potential weakening of the rule of law and the concentration of judicial and executive power, which would reduce oversight and accountability.”

Julius Baer added their name to Morgan Stanley, Bank of America, JP Morgan, Citibanamex and Fitch ratings warnings of the economic and financial impact regarding the approval of judicial reform.

Across the border, the US economic docket revealed the New York Fed’s consumer inflation expectations, which remained unchanged at 3%. However, market players are still eyeing Wednesday's release of August’s Consumer Price Index (CPI).