On the International spectrum, the global economy is watching and waiting to see President Donald Trump’s actions on the North American Free Trade Agreement, something he mentioned and threatened to do just last week while in Davos.
According to speculators on the issue, there's another critical risk haunting Mexico, in the form of its upcoming presidential election. Populist Andrés Manuel Lopez Obrador (also known as AMLO), is now leading in the country's polls as the country gears up for the July presidential elections that could have big implications for U.S.-Mexico relations.
Lopez-Obrador who also served as the mayor of Mexico City, is making his third attempt at securing presidential power. Now, global investors are viewing his rise as a key risk ahead of the election, which could shake up the already shaky state of NAFTA renegotiations.
Until now, the trade pact talks have been mostly viewed through the prism of domestic concerns in the U.S. — but popular opinion in Mexico is now becoming more of a factor.
As of now, the market does not look to have priced in this effect and is important to highlight that the Mexican peso has performed strongly in recent weeks.
The commodities sector, one of the country's most productive segments, the state owned oil company PEMEX—and its recent reform efforts — is being viewed as vulnerable if Lopez Obrador decides to "audit" the oil sector, analysts say.
Dollar Gains Before State of the Union Speech
Daily Analysis - 30/01/2018