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Forex Economic Calendar: What is it and How Does it Work?

Forex Economic Calendar: What is it and How Does it Work?

FOREX EDUCATION

Amongst all the tools used by traders, the forex economic calendar is probably one of the most important. Offering a detailed view of all the important news events and upcoming economic data releases across the world, the economic calendar allows traders and investors to stay informed on the latest market-moving events, enabling them to plan their trading strategies accordingly. 

In this article, we will cover what the economic calendar offers forex traders in more detail, why it is so important to follow, how to use the economic calendar, the most important calendar events to look out for, and more.

What is an Economic Calendar?

An economic calendar serves as a comprehensive tool that highlights significant national and international events likely to influence the global economy and the financial markets in real time. The forex economic calendar provides a schedule of upcoming economic events that have the potential to impact various financial markets such as  forex, shares, indices, commodities, bonds, and even more.

Regardless of your trading time frame or activity level, monitoring economic calendars is essential for all forex traders. Whether you’re a short-term trader or a long-term forex investor, staying informed about major economic releases, their expectations, and final outcomes is crucial for making informed trading decisions and navigating the global markets successfully.

How to Read an Economic Calendar?

Understanding how to read an economic calendar is key to staying informed about the crucial macroeconomic events that can impact the markets. This comprehensive tool covers nearly 4,000 events, including central bank meetings and significant speeches, providing a holistic view of the world’s economic landscape. Major announcements like the US non-farm payrolls, CPI, PPI data, and manufacturing figures from key economies such as the US, UK, eurozone, China, and Japan are closely monitored by forex traders. Additionally, you can access insights into other economies like India, Canada, and New Zealand.

The calendar’s customizable features allow you to sort events based on various criteria such as date, country, timeframe, category, or market impact. Events are categorized into high, medium, and low impact levels, backed by extensive historical data analysis. This categorization aids in identifying announcements likely to have the greatest influence on the financial markets.

Moreover, the calendar enables forex traders to delve deeper into specific countries, providing access to charts depicting data like interest rates and GDP, facilitating comparisons with other nations.

Tailoring the calendar to your preferences and trading strategy is simple and also strongly advised in order to tailor your insights to your specific trading plan. You can filter events based on relevance to specific instruments or asset classes you want to trade. This adaptability ensures you stay informed and focused on the events that matter most to your trading endeavours.

How to Use an Economic Calendar for Forex Trading

When reading the economic calendar, forex traders need to grasp the vital information associated with each event, empowering traders to make informed decisions. First and foremost, take note of the time and date of the events you’re interested in. Familiarizing yourself with these timings ensures you’re prepared for the market volatility.

Significance is denoted by stars, with three stars indicating events of strong significance that typically lead to high market volatility upon release. Conversely, one star denotes low volatility events. For data releases like CPI or NFP, two values are provided: the expected value and the actual value. The latter is updated upon release. The expected value represents the market consensus based on economists’ forecasts.

For instance, let’s consider the example of US CPI data, a highly significant release occurring monthly. Suppose the current US CPI stands at 3.5%, with the upcoming release expected at 3%, lower than the previous. Understanding the forecasted value is crucial. In this scenario, a decline in US inflation historically favors the US Dollar and may negatively impact gold and stock prices.

However, it’s important to remember that these interpretations are guidelines. Economic releases like US CPI can trigger highly volatile price swings before establishing a clear direction. Therefore, forex traders should always remain adaptable when trading economic releases.

How to Customize the Economic Calendar

For a deeper dive into specific economic events, forex traders can customize the calendar based on category, countries, time, and significance. Mastering the economic calendar’s filtration system will save you time and help you filter out unnecessary information related to your trading plan.

Oftentimes, you will also find a keyword search bar. Traders can utilize this feature to search for a specific query across the financial markets. For example, searching ‘unemployment’ will highlight any countries with jobs related data on the horizon.

The country filter allows you to select from dozens of countries, only displaying economic events taking place in the regions you have selected. 

Forex traders can also filter based on significance. The volatility slide bar will allow you to filter events based on 3 different volatility levels including low volatility expected, moderate volatility expected, and high volatility expected.

Important Events in the Economic Calendar

Certain announcements and news events can be a huge driver of market volatility, especially in the forex markets. The following list outlines the most impactful events that significantly move the markets.

  • US Non-farm payrolls (NFP)
  • US Unemployment Rate
  • Central Bank interest rate decisions
  • Consumer Price Index (CPI)
  • FOMC Meetings
  • Retail Sales
  • Consumer Confidence Index
  • EIA Crude OIL Inventory
  • OPEC Meetings
  • Producer Price Index (PPI)
  • Gross Domestic Product (GDP)

Conclusion

FX Newsroom is your ultimate news platform. In conclusion, the forex economic calendar is a vital tool for traders, providing a detailed overview of significant national and international events that impact global financial markets. By staying informed about major economic releases and understanding their implications, traders can make informed decisions and adapt their trading strategies accordingly. The calendar’s customizable features allow traders to tailor their insights to their specific trading plans, filtering out irrelevant information and focusing on events that matter most. Whether you’re a short-term trader or a long-term investor, mastering the economic calendar is essential for navigating the dynamic world of forex trading successfully.

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