What is an Economic Calendar?
Economic Calendars are an absolute must for anyone thinking about trading!
Economic Calendars contain all the upcoming data releases that will shape the way the markets will move in the near future, as well as datasets of previous data that has already made a market impact. You will be able to see which news releases are coming and be able to filter by how volatile those figures are, which country is releasing data and many more.
Traders rely on charting to aid their technical analysis in the same way that traders rely on an economic calendar to shape their fundamental analysis.
Some of the most important releases on an economic calendar are as follows:
- GDP (Gross Domestic Product)
- PMI (Purchasing Managers index)
- FOMC (Federal Open Market Committee)
- NFP (Non-Farm Payrolls)
- Retail Sales
- Interest Rate Decisions
We will take a closer look at some of the most volatile data releases at the end of this article.
When you’re ready to put your economic calendar knowledge to the test – Click here to open your account.
What Information does an Economic Calendar contain?
Here are the main pieces of information traders will be looking out for on an economic calendar:
- TimeZone – This can be changed to where-ever you are in the world to ensure you don’t miss any data releases and the dates and times shown for each release are correct
- Country – The calendars will usually have a Country filter. Using this function, you will be able to choose which Country’s data you are interested in. You may be very concerned with US data releases but not at all interested in Turkish data. Simply ensure the US option is checked and uncheck the TRY box for the Turkish data
- Volatility/Importance – This option lets you select which kind of data you want to see in terms of expected market impact. For example, many people aren’t interested in mortgage rate releases as they have a ‘low’ market impact. Whereas almost every trader will have ‘Non-Farm payrolls’ showing on their calendars as this release is seen as ‘high’ volatility
- Timeframes – You will be able to select and essentially build certain calendar days and entries yourself. The default options are usually along the lines of; Today, This Week, Next Week, Previous Week etc. Most calendars also have a fully customisable option whereby you can select a completely separate date range
- Consensus – Most calendars will show the name of the release, which country is releasing the data, implied volatility and also a consensus or predicted number for each release. The figures are important as beats and misses of these numbers are large contributors to market price. Often, if we see a beat the ‘actual’ figure will show in green text while a miss will show in red text.
- Previous – Consensus numbers are extremely important as explained above. But Previous numbers are also a handy bit of information for your trading. You can see how certain releases are improving or vice versa and you will start to see patterns emerging. Previous numbers are also very important when there has been a revision of the previous months data – another contributor to market volatility.
- Alerts/Countdowns – The final calendar functions of note are alerts and countdowns. Countdowns will be able to show you how long you have until each dataset is released (Just ensure your time zone is set correctly!) and alerts can be set (usually as chimes) to announce when the data has been released and you can now read the ‘actual’ numbers.
Most economic calendars are different – so have a look at around and see which one catches your eye. We haven’t covered every single function here – just the ones you should concern yourself with, especially if you are new to the trading world.
Top 3 economic calendar events
To round off this article, we are going to take a look at 3 of the most volatile data releases you are likely to find on any economic calendar. Ensure you make yourself aware of these releases and before you start trading, sit in front of your screen and without placing a trade, just watch the markets move around these figures. Get a feel for how the markets will react to different sets of data and which way round your trade would’ve been.
- Non-Farm Payrolls – Traditionally seen as the liveliest data release in any given month, NFPs show the number of jobs added to or lost in the US economy in the previous month. If the figure released is higher than the predicted number, then this is seen as positive for the USD as it’s a sign of a growing economy. Therefore, the USD will rise in value. Conversely, if the number is a miss (is lower than the consensus) the this is seen as bad for the USD and it will fall in value
- FOMC (Federal Open Market Committee) – The FOMC are a committee in the states that operate under the FED (Federal Reserve). They are tasked with making key interest rate decisions and money supply within the US. By law, they must meet 4 times a year but usually meet 8 times per year
- Because Interest rates have such a key impact on many markets, the FOMC is always one of the busiest and most volatile times to trade. The key points are usually at 7pm London, when the Interest rate decision is made (If rates go up this is seen as positive for the USD and the value will rise and vice versa) and also at the preceding press conference from 730pm London. This has been known to go on for well over an hour and some of the more volatile periods of trading are during the Q and A session after the speaker has finished his speech
- Gross Domestic Product (GDP) – GDP is a measure of the health of a country’s economy. It measures the size of the economy by the valuation of goods and services produced by that country. This number is usually presented as a quarterly figure or an annual figure.
There are 3 ways to measure GDP:
- Total value of goods and services produced by the Country (output)
- Income of everyone in the Country
- Everyone’s spending in the Country
If GDP numbers are released showing growth, then that is positive for the Country and the corresponding currency will rise in value. If the reverse happens this is obviously negative for the country and the currency will drop in value.
What is an Economic Calendar: TOP TIP – A ‘Recession’ is when an economy is on the slide and has declined significantly. Recession’s spell bad news for business and employees alike. A recession can often be defined as when a Country produces 2 consecutive quarters of declining GDP. One to remember for your trading!
What is an Economic Calendar : Top 5 Economic Calendar Sites
What is an Economic Calendar : Example Economic Calendar
This is what a typical Economic calendar will look like in a given week when the filtration system is used to focus on the most volatile figures only:
|TUESDAY, SEPTEMBER 7|
|AUD||RBA Interest Rate Decision|
|AUD||RBA Rate Statement|
|EUR||Gross Domestic Product s.a. (QoQ)(Q2)|
|EUR||Gross Domestic Product s.a. (YoY)(Q2)|
|JPY||Gross Domestic Product (QoQ)(Q2)|
|WEDNESDAY, SEPTEMBER 8|
|CAD||BoC Rate Statement|
|CAD||BoC Interest Rate Decision|
|GBP||BoE Monetary Policy Report Hearings|
|THURSDAY, SEPTEMBER 9|
|CNY||Consumer Price Index (YoY)(Aug)|
|EUR||ECB Interest Rate Decision|
|EUR||ECB Monetary Policy Decision Statement|
|EUR||ECB Deposit Rate Decision|
|EUR||ECB Press Conference|
|CAD||BoC’s Governor Macklem speech|
|FRIDAY, SEPTEMBER 10|
|EUR||Harmonized Index of Consumer Prices (YoY)(Aug)|
|EUR||ECB’s President Lagarde speech|
|CAD||Net Change in Employment(Aug)|
What is an Economic Calendar : Final Thoughts
We hope that we have explained the mechanics of economic calendars, the functions that you will need to use on a daily basis and why these calendars are so important and used by so many traders across the globe. If you want a more in depth look at the larger of the economic events, please check out our other posts on those subjects.
If you’d like to trade around an economic calendar and put your newfound knowledge to test, please click here to open your account today!
Good luck and happy trading!