* Nokkie up 0.8% vs dlr after better economic projections
* Dollar index poised for second week of gains on equity falls
* Sterling reaches new 5-1/2-month low vs euro on Brexit fears
* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E (Updates prices, adds chart, latest news, new comment)
LONDON, Sept 11 (Reuters) - The euro rose on Friday as traders noted European Central Bank policymakers’ calm approach to the euro’s recent appreciation, while the Norwegian crown surged on official forecasts the economy will now contract by less than predicted.
After a press conference on Thursday at which ECB President Christine Lagarde said the bank did not target the exchange rate, sources said policymakers had agreed to look through the euro’s rise, judging it was broadly in line with economic fundamentals.
Any advance higher in the euro may be curtailed, however, by ECB chief economist Philip Lane’s warning on Friday that a strong euro will further dampen price pressures.
“When market participants compare the tone of the ECB with the Fed’s formal shift to allow greater inflation, the market remains encouraged to sell the dollar,” said Derek Halpenny, head of research at MUFG.
“But the euro/dollar correction back from 1.1900 after the ECB press conference does indicate that dollar selling may still have reached its limits for now,” Halpenny said.
In fact, the U.S. currency was poised for a second week of gains, an index which tracks it against major currencies showed . The dollar gained overnight as jitters in U.S. equity markets had investors sticking to safer assets before giving way to allow the euro to shine.
The euro was last trading up 0.4% at $1.1863, though it had reached $1.1917 the day before, an eight-day high. Euro/Swiss franc rose 0.3% to 1.0787.
The dollar index was last down 0.2% at 93.12, while dollar/Japanese yen rose 0.1% to 106.20.
French asset manager Carmignac aligns with the U.S. dollar bears, said Didier Saint-Georges, a member of Carmignac’s strategic investment committee.
“We don’t really diverge from what seems to be a consensus view right now that the dollar should weaken. Valuation measures suggest that the dollar is very expensive,” Saint-Georges said, emphasizing that the U.S. fiscal deficit “should be a convincing driver of structural dollar weakness.”
The Norwegian crown rose 0.8% to 9.0075 against the U.S. dollar after the Norwegian statistics bureau now expects the economy to contract by 3.2% this year, less than the 3.9% drop predicted in June.
That prompted Norway to end its temporary relaxation of mortgage lending regulations at the end of September.
Against the euro, the crown rose by 0.3% to 10.6855 , though these moves were not enough to offset the falls on the back of oil price declines in the previous sessions.
Markets were looking to U.S. consumer price data due at 1230 GMT for an insight into the recovery and to the challenge facing the Federal Reserve as it looks to lift inflation. Economists polled by Reuters expected inflation to fall to 0.3% month-on-month in August from 0.6% the month before.
SEB analysts said there is less focus on inflation because of the Federal Reserve’s new, more relaxed stance on its 2% target.
Elsewhere, the pound advanced 0.2% to 1.2832, but sank to a fresh 5-1/2-month low of 92.90 pence versus the euro adding more losses after the heaviest selloffs seen this year sent the pound falling nearly 2% against the euro on Thursday.
As the Brexit saga intensifies, sterling was on course for its worst week since March when forex markets were going through a coronavirus-induced turmoil.
The currency may be poised for further losses as time is ticking for the UK to forge a trade deal with the European Union by the end of the year.
The Australian dollar rose 0.7% at 0.7305.
In other ECB news, euro zone finance ministers on Friday will begin the process of choosing a successor to executive board member Yves Mersch, whose term comes to an end in December.
Reporting by Olga Cotaga; Editing by Toby Chopra
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