* Dollar broadly higher after Harker, Mester comments
* Euro lower despite strong PMI surveys from France, Germany
* Sterling dips as policymakers testify in parliament
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Feb 21 The dollar rose broadly on
Tuesday after two Federal Reserve policymakers pointed to a
potential U.S. interest rates rise next month, turning attention
to the bullish fundamentals of the world's biggest economy.
The move, a more than half percent gain for the greenback,
drove the biggest fall in the euro in more than a month, with
concerns over upcoming elections in France and the Netherlands
also weighing on the single currency.
The greenback has struggled through the first two months of
2017, handing back all of the gains it made against the euro and
several other major currencies after Donald Trump's election as
U.S. president in November.
Signals that Trump's administration is unhappy with the
dollar's strength have been one big part of those falls, along
with worries that a sometimes chaotic first month in office does
not bode well for the delivery of tax reform and new spending.
But against that are the solid economic data and rises in
U.S. inflation that have led Fed policymakers including chair
Janet Yellen to promise a rise in rates shortly.
Cleveland Fed President Loretta Mester said late on Monday
she would be comfortable raising rates at this point if the
economy maintained its current performance.
Market News International also quoted colleague Patrick
Harker reiterating that a March rise was on the table.
"My sense, although we're not all in agreement (in this
trading room), is that the dollar is just on a firmer footing,"
said Neil Mellor, a strategist with Bank of New York Mellon in
"Fundamentals have started to take a greater slice of the
attention again, not least because of Janet Yellen's message
last week. Whether it will stay like that is the big question."
The euro hit a six-day low of $1.0532 in morning trade in
Europe, down 0.75 percent on the day. If sustained through U.S.
trading, that would be its biggest daily loss since Jan. 18.
The dollar was also up 0.6 percent against the New Zealand
dollar, 0.5 percent against its Australian counterpart
and 0.7 percent against the Swiss franc.
Much attention has focused in recent days on risks around
France's elections. One poll on Monday, while an outlier, showed
the gap between centrist favourite Emmanuel Macron and far-right
anti-EU nationalist Marine Le Pen shrinking to 16 points.
A strong batch of purchasing manager surveys out of France
and Germany were not enough to halt the falls in the euro.
"The euro zone PMIs were all very strong, yet at the same
time the euro has been very heavy this morning," said Gavin
Friend, a currency analyst with National Australia Bank in
"We are still two months away from the French election but
there is clearly some safe haven buying as we get nearer."
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Tom Heneghan)