Economic calendar for traders
Two types of financial analysis are used in forecasting currency rates: technical and fundamental. The first one is based on chart data. It is the search for figures and indicator signals. For fundamental analysis we need financial reports of companies, FX schedules, information on interest rates of the Central Bank, the macroeconomic data this week.
Even those speculators who prefer technical analysis use news to work. They need a list of events so that trading is not spoiled by volatility because of important information.
What is an economic forex calendar
This is a feed of macroeconomic news. Past, current and future events are listed here with the exact date and time. Each one is located in a table with past publication data, a forecast, and a line with the results of the recently posted ones. Events are marked with the flag of the country that gives the statistics. The news has a level of importance. It is marked with different icons. The more such signs, the stronger the effect on the market.
Important events in the forex calendar
To use a forex calendar for economic events and news, you need to know what information is important. Unimportant is the one which is inserted by the site itself.
The unimportant ones are the releases with one head. These are statistics on economic interests and data from countries that do not affect currency quotes. It is important to know the release date and the significance of the events to understand their impact on the market. Below are the news items that are considered important when analyzing and entering the exchange.
From the general population of people with no fixed income, those who are looking for a job are taken. Or those who want to work in the country. A high index figure indicates difficult times for the state’s economy. In addition to the unemployment rate, there is no less significant information. It speaks to employment, related to the number of people receiving benefits or applications for benefits. Such news also affects the crude oil price chart live.
Business activity index
The Forex calendar contains several such indicators. The data is gathered from questionnaires given to employees from different economic sectors. Prices, production volumes, demand levels, and employment information are recorded. The index is tried on a scale from 0 to 100 to assess the condition. The index has the following values:
- 50 — the situation has remained the same since the last period.
- Below 50 — changes for the worse.
- Above 50 — growth to the previous period. It is a sign of an improvement in the economy in the country.
A score of 50 does not indicate that things will go well. If business activity is above 60, it is a sign of inflation. Central banks are starting to raise interest rates so the economy doesn’t overheat. The normal rate is between 45 and 50. Forex information on business activity has a direct impact. The higher the value, the stronger the currency.
An economic tool used to keep track of inflation is the consumer price index. If you study the US economic calendar, you will find that countries publish consumer price index data at least once a month. The news often has the 2nd level of importance.
For the index they take a basket of different goods. The publications indicate the change in demand.
If the consumer price index has produced positive results, the economy is growing. And people can afford to buy more than before. The trade is going well. If growth is strong, there is a risk of excessive inflation. That’s why central banks started raising rates to calm the index.
A decline in the index indicates that demand for goods has fallen. People don’t have enough money for some classes of goods. The central bank will start to lower interest rates to stimulate the economy.
If the rate goes up, it means there is a lot of money in the country. A low interest rate makes it unattractive to invest in falling money. The national currency loses value.
When the consumer price index rises, the central bank raises its key rate to curb inflation. The country’s currency rises in value again. The index begins to fall. Whether inflation accelerates or declines depends on when the consumer price index rises or falls.
A country’s exchange rate depends as much on the amount of goods exported and the amount imported as it does on other financial indicators. To understand how much of this data changes, you need to keep an eye on the release of the Balance of Trade.
If more goods are exported, national money becomes more expensive. Foreign nations are forced to buy the currency of the supplying country to settle trade disputes. An increase in the index is a good indicator for the exchange rate of national money.
Gross Domestic Product — information on the value of a country’s goods and services for final consumption. By the change in the level one draws conclusions about what is happening in an individual state or in the global economy. A decline in GDP means that there are preconditions for a crisis.
Central banks and the Federal Reserve (USA) watch the inflation rate in the country, because they are responsible for the monetary policy of the state. If it is necessary for the economy to start growing, the central bank lowers the key rate. When money depreciates, the rate is raised to make funds less available.
The news is called the Interest Rate Announcement. It is necessary to keep an eye on the tool as exchange rates change toward this indicator. Also, it is useful to watch speeches by the heads of the Central Bank and representatives. They give their predictions on new changes in monetary policy.
Corporate reports — economic calendar this week
The economic calendar itself does not give traders information on financial reports. But in addition to fundamental analysis, it is better to pay attention to a company’s quarterly and annual earnings season.
Such information causes serious volatility in one or more economic sectors. Markets start to be turbulent. forex including. In this situation, it is impossible to assess the situation with exchange rates.
The economic calendar this week — summary
The calendar is an assistant to the fundamental analysis of currencies. But it is useless in isolation from other methods. Basically, this tool is needed to determine global trends and to avoid high volatility.