Reply #8: Euro saw large investment capital outflows in December

[54anickel]

Toward the end of the article

http://www.forbes.com/business/newswire/2004/02/24/rtr1273053.html

Meanwhile markets also shrugged off European Central Bank data showing investment capital poured out of the euro zone in December at a much faster pace than in November.

Net combined direct and portfolio investment outflows amounted to 10.4 billion euros in December, widening sharply from outflows of 1.4 billion euros in November.

Investment inflows largely supported the euro's rally last year after big outflows sapped the single currency's strength earlier in its short life, though the euro also gained some five percent versus the dollar in December.

"It has to be said, the rally we saw through December is not being backed up by underlying investment flow," said Tony Norfield, global head of foreign exchange strategy at ABN Amro, adding the euro had gained mostly because investors were hedging against a further drop in the dollar.

"It doesn't mean the euro cannot go up any more, and in fact we think it is starting another short rally phase... but it does highlight how global investors are concerned about dollar risk."