Market Extra: These are the 2 biggest reasons for a weaker U.S. dollar

A persistently weak dollar is confounding currency traders and roiling global financial markets.

Investors across asset classes are feeling the effects of the buck’s rocky start to the year, with the ICE U.S. Dollar Index DXY, -0.34% a measure of the currency against six major rivals, dropping 3.1% in the year to date, adding on from its 10% loss last year. Last week alone, the buck dropped 1.7%.

So what’s been driving the dollar? Here are the two main culprits:

Central bankers and the new gang at the Federal Reserve

Central bank policy is thought to be one of the biggest drivers of currencies, so the Fed’s hawkishness and expectations for three rate increases in 2018 seem to contradict the buck’s soft performance.

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