FOREX-Euro advances after ECB's Lagarde says exchange rate not being targeted

    * ECB's Lagarde more hawkish than expected -analyst
    * Euro rises to one-week high vs dollar
    * ECB lifts growth forecast
    * U.S. jobless claims worse than expected; dollar slips
    * Graphic: World FX rates in 2020

 (Adds comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 10 (Reuters) - The euro rose to a one-week high against the dollar on Thursday, after
European Central Bank President Christine Lagarde said that while the ECB is watching the exchange rate,
it is not a monetary policy tool.
    Her comment suggested the ECB was unlikely to undertake measures to weaken the euro despite its recent
gains, giving traders motivation to take the single euro zone currency higher.
    As expected, the ECB held interest rates steady on Thursday.
    The euro rose as high as $1.1917, a one-week peak, and was last up 0.2% at $1.1825. The
euro's high this year is $1.2014, with the currency surging roughly 6% so far this year.
    But a strong euro tends to hurt an export-dependent economy like the euro zone, raising concerns from
some ECB officials such as chief economist Philip Lane, who said the exchange rate mattered to monetary
    "We do not target the exchange rate," Lagarde said during a news conference, adding that the central
bank was monitoring it.
    Just as Lagarde was starting her press conference, Bloomberg news came out with a report, citing ECB
sources, saying there was no need to overreact to the euro's gains. Traders said the Bloomberg report
caused a spike in the euro.
    "Markets know there is very little that the ECB can actually do to weaken the currency. Rates are
almost as low as they can possibly go and the various asset purchase and lending program are already
sizable," said Seema Shah, chief strategist at Principal Global Investors.
    "What's more, the euro is strengthening for all the right reasons: improving growth, relatively
contained COVID infection rates, and positive developments in the fiscal stimulus region," she added.
    The ECB raised its economic outlook for this year, although projections for next year and 2022
remained little changed. The new forecast predicts a contraction of 8.0% in 2020, compared with its
previous estimate of an 8.7% fall. 
    In afternoon trading, the dollar index slipped 0.1% to 93.345, after hitting a four-week high
the previous session.
    The dollar slipped after data showed U.S. initial jobless claims totaled a seasonally adjusted 884,000
for the week ended Sept. 5, matching the number of applications received the prior week. Economists polled
by Reuters had forecast 846,000 jobless claims applications.
    U.S. producer prices were better than expected though, with gains of 0.3% for the headline and 0.4%
for the core figure.
    Against the yen, the dollar slipped 0.1% at 106.09 yen.
    Sterling dropped to a seven-week low against the dollar at $1.2777, weighed down by fears the
UK-EU trade negotiations may fall apart. It was last down 1.7% at $1.2783. 
    The pound also slid to a more than five-month trough versus the euro, which rose to 92.70 pence
    Currency bid prices at 3:22PM (1922 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1815        $1.1802     +0.11%         +5.40%      +1.1916     +1.1801
 Dollar/Yen       JPY=        106.0900       106.1700    -0.08%         -2.54%      +106.2900   +105.9900
 Euro/Yen         EURJPY=     125.37         125.31      +0.05%         +2.80%      +126.4500   +125.3100
 Dollar/Swiss     CHF=        0.9103         0.9123      -0.22%         -5.94%      +0.9132     +0.9050
 Sterling/Dollar  GBP=        1.2783         1.3000      -1.67%         -3.59%      +1.3034     +1.2780
 Dollar/Canadian  CAD=        1.3193         1.3141      +0.40%         +1.59%      +1.3202     +1.3118
 Australian/Doll  AUD=        0.7255         0.7282      -0.37%         +3.33%      +0.7324     +0.7253
 Euro/Swiss       EURCHF=     1.0757         1.0767      -0.09%         -0.88%      +1.0787     +1.0751
 Euro/Sterling    EURGBP=     0.9243         0.9077      +1.83%         +9.33%      +0.9270     +0.9076
 NZ               NZD=        0.6644         0.6681      -0.55%         -1.34%      +0.6707     +0.6644
 Dollar/Norway    NOK=        9.0854         9.0158      +0.77%         +3.50%      +9.0899     +8.9290
 Euro/Norway      EURNOK=     10.7359        10.6440     +0.86%         +9.13%      +10.7437    +10.6211
 Dollar/Sweden    SEK=        8.7727         8.7424      +0.44%         -6.15%      +8.7793     +8.6863
 Euro/Sweden      EURSEK=     10.3669        10.3217     +0.44%         -0.98%      +10.3928    +10.3206
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio and Leslie Adler)