What is Forex Economic Calendar
What is the Economic Calendar for Forex?
The economic calendar: what is it?
The economic calendar is basically a diary in which all major economic events are noted. It also contains the dates of certain political events that can affect exchange rates.
Thanks to the economic calendar, you know in advance events that could possibly affect the courses. This makes it possible to foresee announcement effects and to anticipate an acceleration or reversal of the trend.
So it is highly recommended that you always keep an eye on this calendar to identify future opportunities.
How do you interpret the economic calendar?
Almost all business calendars available online are presented in tabular form. The appointments are sorted by date and listed chronologically. The economic calendar generally has several columns:
- the name of the expected event
- the time of the event
- the importance of the event (only included in some calendars)
- the relevance of the event
- the previous relevance
- the consensus (the market expectation or forecast)
Some economic calendars even go as far as telling you which asset is affected by the announcement.
This shows how important the interpretation of the economic calendar is. Above all, you have to take into account the difference between the relevance of an event and the previous relevance, including the forecast. The difference between the forecast and the real value determines the direction in which the asset moves.
The following indicators in the economic calendar should be observed
Of course, you don't have to be interested in all of the dates listed in the economic calendar. However, one needs to be able to see which asset is affected by the event in question and how strong that influence is.
The following indicators are particularly important for trading on Forex:
- Interest rates: These are set by the major central banks after monetary policy meetings and they have a major influence on the currency pairs. Most of the time, however, the sentences remain unchanged.
- GDP: This is also an indispensable indicator because it generally represents the annual sum of all goods produced in a country or a group of countries. A large change in this number usually triggers significant movement.
- Consumer Price Index: Also called the CPI, it can be used to determine the rate of inflation in a country or geographical area.
- Retail sales: As with the consumer price index, retail sales can be used to determine a country's purchasing power and thus its inflation. Its main purpose is to foresee future movements in the other indicators.
- Employment and Unemployment: These statistics generally reflect a country's growth and are highly valued by investors. They can be a sign of a possible change in the country's monetary policy.
Of course, depending on which currency pair you are tracking, other indicators can also be important. For example, it is known that certain currencies are influenced by the development of raw material stocks.
Incidentally, one should never look at the indicators from the economic calendar in isolation, but rather couple them with information from the fundamental analysis.
Other fundamental data that cannot be found in the economic calendar
Because the economic calendar contains the events that may affect the price of assets, it is an insightful source of information for investing in the financial markets. But such fundamental information can also be found outside of this calendar.
For example, if you are trading publicly traded stocks, it is interesting to look at specific data related to the economic news of the issuing company. For example, company results, sales and earnings are indispensable in this context.
You can also subscribe to the newsfeeds of the assets you are interested in and receive the very latest information directly from the trading markets on a daily basis.
Last but not least, you should know that trading platforms also provide their users with the latest news promptly and free of charge.
Can you develop a strategy just by relying on the economic calendar?
The economic calendar is an indispensable tool for developing an investment strategy, but with it alone you will not be successful in the stock market. If possible, the economic calendar should be used in addition to the technical analysis.
Fundamental events and data strongly influence asset prices, but it should be remembered that investors also base their strategies on technical data and data from chart analysis. It would therefore be a mistake not to take this information into account.
A comprehensive and promising analysis is therefore a wise mixture of technical analysis and fundamental analysis, for which one uses both the economic calendar and other tools such as trading signals or technical indicators.
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