20 Most Influential People in FX - Forex Market

Friday, 17 June 2005 GMT - Written by Boris Schlossberg, Currency Strategist

Who are the people that influence FX markets? Generally they tend to be the top monetary and Treasury officials from the nations with the world's most liquid currencies. In many subtle ways these men and women can often exercise a greater degree of control over our lives than even elected officials. Certainly they possess tremendous power in the FX market.
Generally, three factors tend to move prices in the FX market

While enormous amount of time is spent analyzing the two topmost categories, we thought it might be quite useful to focus in on the third.

Who are the people that influence FX markets? Generally they tend to be the top monetary and Treasury officials from the nations with the world's most liquid currencies. In many subtle ways these men and women can often exercise a greater degree of control over our lives than even elected officials. Certainly they possess tremendous power in the FX market.

You will note that we have consciously omitted national leaders. Thus, George Bush, Gerhard Shroeder, Tony Blair and many others are not on the list. This is no way diminishes their importance or capacity to impact the market. However, given the fact that in FX markets we trade money, it is the monetary authorities that have the most immediate and persistent effect on day to day trading and therefore are most worthy of note.

Thus without further ado we present our 1st list of 20 Most Influential People in FX - a list that we will be sure to update as conditions change. We hope you find it useful and as always invite any comments to be sent to bschlossberg@fxcm.com.

The Americans

Alan Greenspan
Ben Bernake
John Snow
Janet Yellen
William Poole
Jack Guynn

The Europeans

Jean-Claude Trichet
Otto Ossing
Hans Eichel
Herve Geymard

The Japanese

Toshihiko Fukui
Sadakazu Tanigaki
Hiroshi Watanabe

The British

Mervyn King
Gordon Brown

The Swiss

Jean-Pierre Roth
Philipp Hildebrand

Commodity Currencies

David Dodge - Canada
Ian Macfarlane - Australia
Alan Bollard - New Zealand

The Americans

Alan Greenspan, Chairman of the Federal Reserve

As the principal monetary policy official for the world's reserve currency Alan Greenspan is viewed as the most powerful man not only in FX but all financial markets. Fiscally conservative yet monetarily accommodative, he has served under four different Presidents in both Republican and Democrat administrations. Originally an advocate for the return to the gold standard, he admitted, during the most recent Humphrey Hawkins testimony, that he no longer held such views. As the Chairman of President Reagan's 1983 Commission on Social Security he was the architect of Social Security reforms which imposed some of the largest one time tax increases on the American workforce but at the same time guaranteed solvency for the program through the year 2052. Yet he never fully supported the policy recommendations of his own work, often questioning the viability of the Social Security program during his tenure.

For this, as well as his tepid criticism of the massive Federal deficits incurred over the past 4 years, he has been vilified by critics for the philosophical inconsistency of his positions. Nevertheless, he has managed to navigate the nation through 1987 Stock Market crash, the 1991 post-Gulf War recession, the collapse of LTCM in 1998, the year 2000 burst of the NASDAQ bubble and 9/11 with only minimal setbacks for the economy. During his tenure as Chairman, US GDP increased in 16 out of 17 years - one of the smoothest periods of economic growth in US history. Ironically enough, the Chairman who is an ardent believer in laissez-faire capitalism and is a fan of Ayn Rand, had never hesitated to use the full power of government printing press at his disposal to quickly generate liquidity and re-establish confidence in times of market crisis. Perhaps this steak of steely pragmatism has been the key to his success. The Chairman is scheduled to step down January 31st 2006. In the meantime he reaffirmed his determination to increase the Fed funds rate to a more neutral level assuring that the dollar's carry spread differential against the euro and the yen will continue to expand.

Ben S Bernake, Governor of the Federal Reserve

MIT educated Ben S Bernake originally took office on August 5, 2002, to fill in an unexpired term but was sworn-in on November 14, 2003, as a member of the Board of Governors for the full term expiring January 31, 2018. One of the most vocal and articulate members of the Fed Board Mr. Bernake is a strong believer in more transparency of Fed policy operations. He generated fame and notoriety for his November 21, 2002 speech on deflation to the National Economist club in which he stated, "The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost." Most recently, he admitted that the Current Account deficits are likely persist for a long time but felt confident that US will continue to attract enough capital to fund them. He is considered to be a strong contender for the Chairmanship post once Mr. Greenspan retires.

John W Snow, Secretary of Treasury

Sworn into the office on February 3 2003, Mr. Snow became the 73rd Secretary of Treasury. He arrived to the post from his position as Chairman of CSX Corporation - a major railroad conglomerate. Mr. Snow's tenure as Chairman at CSX lasted for 12 years, the past six of which. CSX stock significantly underperformed both the Dow Jones Transportation and Industrial averages. Mr. Snow initial performance at Treasury was not received well by the FX market as his many statements that US "supports a strong dollar policy " were met with rapid sell-offs of the greenback against the euro. Initially, much speculation centered around the fact that Mr. Snow would depart at the start of the 2nd Bush Administration. However, since commencing his 2nd term, Mr. Snow's performance and reputation have improved as his sobering focus on Federal budget deficits provided market with confidence that the Administration may be finally ready to tackle US fiscal budgetary problems.

Janet Yellen CEO, Federal Reserve Bank of San Francisco

Janet Yellen, a PHD from Yale, has served as a White House economic adviser during the Clinton administration and performed two prior tours of duty at the Federal Reserve. In the past Ms. Yellen, an outspoken liberal Democrat, has at times been a sharp critic of Bush administration's economic policy. While at the Fed, however, she has become a nonpolitical voice for sound interest-rate policy, advocating mainstream monetary methods. She is known as a fair- minded and rigorous thinker. In her most recent comments she stated that US economic growth maintains a sustainable pace and inflation is under control, enabling the Federal Reserve to continue its policy of measured rate hikes well into 2005.

William Poole President, Federal Reserve Bank of St. Louis

President of the St. Louis Fed since March 23 1998, Swathmore and University Chicago educated Dr. Poole spent a large part of his career as a member of the faculty of Brown University where he twice served as chairman of the economics department. In 1978 Dr. Poole published Money and the Economy: A Monetarist View, whose title speaks to his conservative outlook on monetary policy forged in his days as a student at the legendary University of Chicago economics department led by Milton Freedman. Dr. Poole, has a reputation as an inflation hawk. However in a recent interview he noted that price pressures were "well controlled" and argued that continued strong productivity growth, hefty competition and limited wage gains will keep a lid on inflation dampening worries about recent large gains in the PPI.

Jack Gyunn, President Federal Reserve Bank of Atlanta

Unlike many of his finance educated colleagues, Mr. Gyunn holds degrees in Industrial engineering and Industrial Management from Virginia Tech and Georgia Tech. In 1974 he also completed the Harvard Business School's Program for Management Development. A member of the Atlanta Fed since 1964, Mr. Gyunn has had wide experience not only in finance but also in operations aspects of banking. Though an unambiguous bull on the US economy, Mr. Gyunnn has expressed concern about the growth of US Current Account deficits which has led him to become one of the leading interest rate hawks at the Fed. Most recently he noted that the Fed ``still has a ways to go'' in raising interest rates as it seeks to thwart inflation.

The Europeans

Jean-Claude Trichet, President ECB

Mr. Trichet came to the Presidency of ECB after serving as the President of Bank of France. Mr. Trichet enjoys the unenviable distinction of being the only major Central Banker to have stood a corruption trial (for which he was completely acquitted). The trial centered around a scandal involving Credit Lyonnaise which in 1992 was state owned enterprise and managed to hide losses which eventually had to be recovered at an enormous cost by the French taxpayers. As treasury director of the finance ministry at the time. Mr. Trichet was accused by the prosecution of being complicit in the cover-up, but the court found no evidence that Mr. Trichet had any knowledge of the fraud and fully exonerated him.

As perhaps the second most powerful policy maker in FX markets, Mr. Trichet now enjoys a far more august reputation as a cautious and forthright banker. With his continental confidence, Mr. Trichet has been able to communicate the ECB agenda with precision and much appreciated candidness. To his critics he has been too slow to respond to European problems of stagnation and chronically high unemployment. To his admirers he has prudently managed the monetary policy of the 12 nation union during the time of great political, economic and demographic change in the region. Mr. Trichet's clear bias for fighting inflation rather than generating economic growth probably means that ECB is unlikely to lower rates unless the Euro-zone slips into a recession in 2005.

Ottmar Issing, Chief economist ECB

A man with deep academic credentials, Mr. Issing came to the ECB from a career as a professor and Chair of Economics at University of Wurzberg. He has written numerous papers and several books including "Monetary Policy in the Euro Area - Strategy and Decision-Making at the European Central Bank" (2001). He serves as the predominant voice of the ECB on economic affairs and seems to mirror Mr. Trichet's bias towards a restrained and conservative monetary policy rather than greater economic growth and more lenient credit controls.

Hans Eichel, German Finance Minister

Tasked with rejuvenating the stagnant economy of Euro-Zone's largest and most important member, Mr. Eichel has focused on reforming Germany's Byzantine tax code. Despite the continued softness of the German economy, his efforts are being rewarded as the country's latest 2004 budget deficit narrowed to 3.7% from an estimated 3.9% of GDP. The figure still exceeded the 3% cap imposed by the Maastricht Treaty, but having reduced income taxes by another €9 billion this year to spur the economy, Mr. Eichel is aiming for a deficit of 2.9% of GDP in 2005. Mr. Eichel's next goal is to harmonize the country's corporate tax system. He recently stated, "I am working on a form of taxing companies in a way that is neutral from their legal form. It's an enormously complex issue. . . . If we achieve it by 2007, which I expect, it would be great."

Herve Gaymard, French Economy and Finance Minister

Having only recently assumed the duties of finance minister (he has been at the post only since November), Mr. Gaymard is the quintessential French technocrat having graduated from Institut d'Etudes Politiques as well as Ecole Nationale d'Administration. Despite his youth (he is 44) he has served in the National Assembly for over a decade since 1993. Caught between the desire to curb French government spending (debt has risen to 66% of GDP from only 22% in 1981) and the need to solve the country's chronically high unemployment problem which is presently stuck at 10%, Mr. Gaymard has been the most vocal European critic of euro's rapid rise against the dollar. He believes that euro's strength is detrimental to the region so heavily dependent on export growth. During the recent euro rally Mr. Gaymard called for a coordinated intervention by European, North American and Asian authorities to stem the dollar decline.

The Japanese

Toshihiko Fukui, Governor Bank of Japan

A life long career bureaucrat, Mr. Fukui joined the Bank of Japan in 1958 and since then has served there in a variety of posts. Although still governed by the conservative instincts instilled by his career training, Mr. Fukui has instituted a series of important reforms of BOJ business practices. A clear example of new openness comes every time the Bank of Japan announces policy decisions. Since late 2003, Governor Fukui has complimented announcements with press conferences. The central bank also publishes detailed minutes of policy meetings. Such transparency was unthinkable just five years ago. Mr. Fukui has maintained the country's ultra-accommodative monetary policy and is unlikely to change course anytime soon given the fact that Japan has entered its 4th recession in the past 12 years.

Sadakazu Tanigaki, Japan Finance Minister

A former chairman of the National Public Safety Commission and Industrial Revival minister in Prime Minister Junichiro Koizumi's previous cabinet, Mr. Tanigaki was appointed finance minister on September 20th, 2004. A strong voice for controlled and non-volatile FX markets he has noted that, ``Currency levels need to reflect fundamentals in a stable manner...Abrupt moves that don't reflect that are undesirable.'' He has not been shy about threatening the market with intervention, although presently his rhetoric has not been backed by action as MOF stayed out of the FX markets since March of 2004.

Hiroshi Watanabe, Vice finance minister for international affairs

As the top civil servant in Ministry of Finance, Mr. Watanabe is simply known as "Mr. FX" in Japan. His predecessors Former Vice Minister Eisuke Sakakibara was known as "Mr. Yen", and Haruhiko Kuroda and Zembei Mizoguchi were often referred to as "Mr. Asian Currency" and "Mr.Dollar". As the most quoted Japanese official in the FX markets. Mr. Watanabe has been rather vocal in expressing displeasure at yen's rise against the dollar. "The yen is still overvalued against the dollar," he recently noted. Mr. Watanabe is likely to continue monitoring the markets, carefully watching for any break of the psychologically important USD/JPY 100 level.

The British

Mervyn King, Governor Bank of England

A former professor at London School of Economics, Harvard educated Mr. King is perhaps the most successful member of the current group of central bankers. Implementing what many analysts view as the "Goldilocks" monetary policy that is neither too restrictive nor too accommodative, he deftly increased interest rates to defuse the potentially dangerous speculative bubble in UK real estate and then just as quickly ceased the rate hikes preserving the country's longest streak of uninterrupted growth in 200 years. Although some market observers dubbed Mr. King an "academically intimidating governor" who stifles debate within the BOE, his communication with the press has been remarkably even-handed presenting both the pros and cons of establishing a more restrictive monetary policy within the current context of UK economic growth. As someone who has repeatedly emphasized the need to take a long term view in formulating policy decisions, Mr. King is likely to assess a large body of data before implementing new policy direction.

Gordon Brown, Chancellor of Exchequer UK

A member of British Parliament since 1983 and Chancellor of Exchequer since 1997 - a record for continuous service in that post - Mr. Brown is considered to be the most talented and effective public servant in the G-7 world. Under his stewardship UK has continued its streak of 46 consecutive quarters of economic growth, remaining the only G-7 country to avoid recession since the year 2000. A master of the budget, Mr. Brown has been able to contain government spending to 33% of GDP and at the same time kept a lid on any income tax increases. Mr. Brown worked hard to establish an image of fiscal competence, by reassuring business interests and the middle class that Labor could be trusted to run the economy without fuelling inflation. The latest polls show Mr. Brown to be the most popular politician in UK, far more than even Tony Blair. Indeed, if Labor were to lose the upcoming election, it would be the loss of Mr. Brown's leadership rather than Mr. Blair's that could roil the FX markets.

The Swiss

Jean-Pierre Roth, Chairman of the SNB

A citizen of Saxon, Canton of Valais, Dr.. Roth is the graduate of Universite de Geneve who completed his post-doctorate work at MIT. He joined the SNB in 1979 and became President in 2001 after spending most of his professional career at the Bank. In addition to his duties at SNB Dr. Roth is also a member of the Board of Directors of the Bank for International Settlements (BIS) in Basel and governor of the International Monetary Fund (IMF) for Switzerland in Washington. Although adhering to the conservative philosophy of the traditional Swiss banker, Dr. Roth made an effort to be responsive to the current economic slowdown in Switzerland by keeping the SNB funds rate at only 75 basis points. With little danger of Swiss inflation exceeding 2% in 2005, Dr. Roth signaled to the markets that the accommodative monetary policy of SNB is likely to continue for the foreseeable future.

Philipp Hildebrand, Governing Board of SNB

One of the youngest of the world's central bankers - he is only 41 - Mr. Hildebrand is a graduate of University of Toronto as well as the Center for International Affairs at Harvard University. Unlike many of his colleagues, M. Hildebrand spent a large part of his career in private industry serving first as Senior Managing Director of Moore Capital Strategy Group and later as Chief Investment officer for Union Bancaire Privée in Geneva.

Commodity Currencies

David Dodge, Governor Bank of Canada

Appointed Governor of the Bank of Canada on 1 February 2001, for a term of seven years, Queens University and Princeton educated Mr. Dodge has enjoyed a long and distinguished career in federal public service. Most recently he served as Deputy Minister of Health and prior to that as Deputy Minister of Finance. Considered to be far more frank than a typical central banker, Mr. Dodge has expressed concern over the relentless strengthening the Canadian dollar, which is up over 30% against the greenback in the past year. The strengthening of the loonie along with tamer than expected latest inflation results, has led Mr. Dodge to hesitate in instituting any further rate hikes. Although he unequivocally stated that rates must eventually rise, he is unlikely to make any moves until greater evidence of growth or inflation surfaces.

Ian Macfarlane, Governor Reserve Bank of Australia

Governor since 1996, Mr. Macfarlane is one of the longest serving central bankers in the group. Educated at University of Sydney, Mr. Macfarlane has been with the RBA from 1979, serving a variety of positions from Head of Research to Deputy Governor. Considered to be an inflation hawk, Mr. Macfarlane is expected to raise rates once again, as Australian economy spurred by seemingly insatiable demand from China for a variety of commodities is experiencing strong wage growth and a boom in capital spending that is creating capacity constraints throughout the economy.

Alan Bollard, Governor Reserve Bank of New Zealand

The only central banker to have produced a computer simulation game (Oikonomos - where one plays at being the Minister of Finance) Dr. Bollard served as a Secretary of Treasury prior to assuming his post as the Governor. A strong inflation hawk with extensive economics training, Dr. Bollard presides over a currency with the highest short term yield of the group. An ardent supporter of free markets Dr. Bollard expressed concern that New Zealand's 3.4% growth rate over the past decade - among the highest in OECD universe is unlikely to sustain itself as the country is running out labor making further productivity gains more elusive. Nevertheless, should growth continue in the near term Dr. Bollard is expected to maintain a restrictive monetary policy ratcheting rates higher