North America's Central Banks Diverge as USD Strengthens

The final months of 2026 are approaching, and North America's major currencies have begun to shift in strength dynamics. The U.S. dollar has regained its footing, particularly after a recent shift in expectations surrounding the Federal Reserve. This backdrop is expected to continue shaping currency performance through year-end.

Interest rates in North America have diverged significantly, with Mexico maintaining the highest policy rate at 6.5%, followed by the United States at 4.0%. The Bank of Canada has kept its interest rate unchanged at 2.25% since October 2025, adopting a wait-and-see strategy.

Canada's inflation rate has eased to 3.0%, while Mexico's slowed to 3.26% in August. In contrast, the United States' inflation remains near 3.4%. This divergence is expected to influence monetary policy decisions across the region, with the Federal Reserve poised for a more aggressive stance.

The ongoing trade tensions between the United States and Canada may further impact currency performance. Tariffs of up to 50% have been imposed on selected Canadian products, weakening sentiment toward the Canadian dollar.