Economic calendar

What is an economic calendar?

An economic calendar is a schedule that lists the release times of economic, financial, and political events that could potentially impact the price movement of a specific market or the entire market. The economic calendar is considered an essential tool for investors to analyze the market, plan trades, and allocate their portfolios appropriately.

Typically, such events are published on the economic calendar by day, week, and month of a specific year.

The economic calendar provides essential information, including:

The release time of the event
The country publishing the event
The level of impact of the event

Each website will have different versions of the economic calendar, but they are usually categorized by the level of market impact:

Low Impact Events: These are minor events that do not significantly affect prices and are often marked as low impact and receive less attention.
Medium Impact Events: These events usually have a medium level of impact and are often marked with a yellow color or a yellow star.
High Impact Events: These are notable events that have the potential to strongly affect market prices. They are usually marked with red or more stars and are highly watched by investors.

The Importance of the Economic Calendar in Trading and Financial Investment

Typically, economic and political events cause market volatility, where prices can increase or decrease sharply, significantly affecting trades during the times when news is released. Some investors actively seek trading opportunities during these volatile times, while others try to avoid trading during those news release times.

Thus, the economic calendar serves as a tool for investors to proactively monitor the schedule of important events. This information helps investors identify market trends and seize appropriate trading opportunities.

The economic calendar is usually updated for free on financial websites such as ForexFactory, Investing.com, etc.

Which Countries and Regions Should We Focus on in the Economic Calendar?

The United States, Europe, the United Kingdom, Canada, New Zealand, Japan, Switzerland, Australia, and Germany are the countries and regions that should be prioritized because their currencies constitute the exchange rates of the 7 major currency pairs: AUD/USD, EUR/USD, GBP/USD, NZD/USD, USD/CAD, USD/JPY, and USD/CHF, accounting for over 80% of the forex market trading volume, as well as 28 cross-currency pairs and other minor currency pairs.

We should also pay attention to economic information from Germany because Germany leads the Eurozone economy, so important information from this country’s economy affects the value of the EUR. Additionally, you can follow economic information from the countries whose currencies you frequently trade.

Key Economic Events and Data:

1. PMI Index

– **Manufacturing PMI:** Measures purchasing activity in the manufacturing sector.
– **Services PMI:** Measures purchasing activity in the services sector.
– **Construction PMI:** Measures purchasing activity in the construction sector.
– **Composite PMI:** A combined measure of purchasing activity across sectors.

The PMI index reflects purchasing activity in various sectors. A PMI above 50 indicates expansion in the respective sector, while a PMI below 50 indicates contraction.

=> If the actual PMI figure is higher than expected, it is considered positive and may boost the currency’s value. Conversely, if the actual PMI figure is lower than expected, it is considered negative and may weaken the currency.

2. ISM PMI Index

– **ISM Manufacturing PMI:** The PMI for the manufacturing sector by the Institute for Supply Management (ISM).
– **ISM Non-Manufacturing PMI:** The PMI for the non-manufacturing sector by ISM.

These are PMI indexes for the manufacturing and non-manufacturing sectors in the United States, provided by the Institute for Supply Management (ISM).

=> If the actual PMI figure is higher than expected, it is considered positive and may boost the USD. Conversely, if the actual PMI figure is lower than expected, it is considered negative and may weaken the USD.

3. Central Bank Interest Rate Decision

This is a crucial event where investors closely watch changes in interest rates of major currencies, as short-term interest rates are a key factor in determining exchange rates.

=> If the actual interest rate is higher than expected, it is considered positive and may boost the currency’s value. Conversely, if the actual interest rate is lower than expected, it is considered negative and may weaken the currency.

4. Rate Statement

The rate statement is a tool for the central bank to announce the results of interest rate decisions and discuss economic conditions that influenced the decision.

=> If the statement is more dovish than expected, it may be considered negative and weaken the currency. Conversely, if the statement is more hawkish than expected, it may be considered positive and boost the currency.

5. Employment Change

This measures the change in the number of employed people. The number of new jobs created is an important indicator of consumer spending.

=> If the actual figure is higher than expected, it is considered positive and may boost the currency’s value. Conversely, if the number of new jobs is lower than expected, it is considered negative and may weaken the currency.

6. Unemployment Data

– **Unemployment Rate:** Measures the percentage of the total workforce that is unemployed.
– **Unemployment Change:** Measures the change in the number of unemployed people from the previous month.

=> If the actual figure is higher than expected, it is considered negative and may weaken the currency. Conversely, if the actual figure is lower than expected, it is considered positive and may boost the currency’s value.

7. CPI – Consumer Price Index or Core CPI

CPI measures the change in prices of goods and services from a consumer’s perspective. This index indicates changes in purchasing trends and is a key tool for measuring inflation.

=> If the actual figure is higher than expected, it is considered positive and may boost the currency’s value. Conversely, if the actual figure is lower than expected, it is considered negative and may weaken the currency.

8. PPI – Producer Price Index

PPI measures the change in the price of goods sold by producers. It is also a leading indicator for consumer price inflation, which constitutes a significant part of overall inflation.

9. GDP – Gross Domestic Product

GDP is one of the most important economic indicators, assessing the overall economic growth rate and the development level of a country.

10. **Central Bank Speeches**

Speeches by central bank heads provide traders with clues about future monetary policy. These speeches can create short-term positive or negative trends for a currency’s value.

11. Retail Sales

Retail sales are a crucial indicator, reflecting consumer spending, which constitutes a large portion of overall economic activity.

12. Crude Oil Inventories

Data on crude oil inventories from the U.S. Energy Information Administration (EIA) indicates the weekly change in the number of barrels of crude oil held by U.S. companies. Inventory levels impact the prices of petroleum products and can even influence inflation.

=> If crude oil inventories increase more than expected, it suggests weaker demand and falling crude oil prices. Conversely, if crude oil inventories decrease more than expected, it suggests stronger demand and rising crude oil prices.

13. Initial Jobless Claims

Initial jobless claims indicate the number of people who filed for unemployment insurance for the first time in the past week. This is the earliest U.S. economic data reported weekly.

=> If the number of claims is higher than expected, it is considered positive and may boost the USD. Conversely, if the number of claims is lower than expected, it is considered negative and may weaken the USD.

14. Average Earnings Index + Bonus

This index measures the change in the cost of labor, including bonuses, for businesses and the government. It provides a good indication of personal income growth in a given month.

15. Building Permits

This data shows the change in the number of new building permits issued by the government. Building permits are a leading indicator of demand in the housing market.

=> If the actual figure is higher than expected, it is considered positive and may boost the USD. Conversely, if the actual figure is lower than expected, it is considered negative and may weaken the USD.

16. ADP Nonfarm Employment Change

This measures the monthly change in non-farm, private employment, based on payroll data from approximately 400,000 U.S. businesses. This data is released two days before the government’s figures, making it a good predictor of the official nonfarm payroll report.

17. Nonfarm Payrolls

This measures the change in the number of people employed during the previous month, excluding the agricultural sector. Nonfarm payrolls are considered the most important indicator of consumer spending, which constitutes a large portion of overall economic activity.

18. FOMC Economic Projections

This report includes the Federal Open Market Committee (FOMC) forecasts for inflation and U.S. economic growth over the next two years. An important part of the report is the analysis of individual FOMC members’ interest rate projections.

19. FOMC Statement

The FOMC Statement from the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve is a policy statement that includes the outcome of the interest rate vote, a discussion of the economic outlook, and hints about future votes.

=> If the statement is more dovish than expected, it may be considered negative and weaken the USD. Conversely, if the statement is more hawkish than expected, it may be considered positive and boost the USD.

20. Fed Interest Rate Decision

Traders closely monitor changes in interest rates, as short-term interest rates are the primary factor in pricing the USD and currency pairs.

21. Philadelphia Fed Manufacturing Index

This index gauges the relative level of general business conditions in Philadelphia. A positive reading indicates improving business conditions, while a negative reading indicates a downturn. Data is compiled from a survey of approximately 250 manufacturers in the Philadelphia Federal Reserve District.