An economic calendar is often used by traders to track market-wide economic indicators, including economic policy decisions and other economic-related news. Market-wide economic events, which are most typically announced or issued in a news conference, carry a very high likelihood of affecting the broader financial markets. Accordingly, traders and investors who view the broader economy may be more likely to react quickly to any potential changes. Conversely, those who prefer to analyze isolated economic indicators may be more resistant to change based on unannounced announcements.
In addition to the market-wide scope of the economic calendar, it is also important for investors and traders to be aware of national interest rates and other monetary policy measures. Some national interest rates have been rising in recent weeks, particularly in the U.S. The unexpected change in the federal funds rate created negative implications for many traders and investors. Economic news that touches on these factors can provide new purchasing opportunities for traders and investors. Similarly, some central bank actions can provide traders and investors with additional buying pressure or market impact. For example, some central banks have recently indicated that they will probably raise interest rates over time. If the U.S. dollar weakens against other currencies during this period of elevated interest rates, it may provide additional buying pressure for traders and investors.
Additionally, the scheduled release of important economic indicators provides additional buying pressure or market impact. For example, the release of non-farm payrolls at the end of May usually provides traders and investors with additional confirmation that the current period is above normal in terms of economic activity. Similarly, the release of GDP growth figures at the start of July often provides additional confirmation that the current period is above normal in terms of economic activity. While these official estimates are not necessarily predictive in nature, they provide additional confirmation that underlying indicators are supported by current real-time data.
It is important to note that the timing of announcements regarding upcoming announcements is especially beneficial to traders and investors who have been waiting for a particular measure to occur. For example, a release of the non-farm payrolls report is typically released about two weeks before a widely anticipated event. For traders and investors who have been watching the move to increase employment, this timing is especially beneficial. In addition, announcements of interest rates usually occur approximately four weeks prior to the opening of the stock market. This additional buying pressure can be particularly beneficial to traders and investors who purchase shares of a company at the start of a rising stock price in anticipation of a rise in price later.
The federal funds rate is an important tool that many traders use to determine the direction of the forex market. Changes in the path of interest rates can provide traders and investors with additional buying pressure or market impact. For example, if the FOMC reports that rates will remain on hold, traders may expect further depreciation in the United States dollar. In contrast, should rates begin to rise, traders may believe that the economy has strengthened enough to warrant a stronger dollar and hold onto their previously held positions. The introduction of the EFT also provides a convenient mechanism for traders and investors to obtain the data they need about economic activity around the clock.
Another benefit to the forex economic calendar, particularly for short term traders and investors, is the information it provides regarding economic news or events that may impact global markets. For example, if there are unexpected changes in the political world, the worldwide economy may change. If oil prices fall by approximately 50 percent in a matter of days, short term traders may want to consider selling their stocks in the U.S. immediately. The introduction of the EFT provides a convenient way for traders and investors to obtain this information quickly and without difficulty. In addition, if there are negative reports published in international newspapers regarding the economy, traders and investors may want to sell their bonds and currencies concerned.
Economic Calendars are useful tools used to determine whether the current state of the economy is normal and if there is a deviation from the previously scheduled time frame. For example, if the U.S. is due to experience a recession, some may choose to sell their bonds and other securities while others may hold on to them. Similarly, traders and investors who follow the U.S. Federal Reserve’s schedules will find out the schedule for the release of key economic indicators like Consumer Price Index (CPI), Producer Price Index (PPI). On the other hand, traders and investors who are aware of market rates, interest rates, inflation, balance of payments, exchange rates, inflation, credit scores and other economic indicators in the major markets around the world can use these economic calendars to gauge their performance in the markets and make decisions regarding trades.
While the introduction of the EFT has helped traders and investors know more information about the economy, it is advisable to also study the various charts and other tools that are available to help one study the movement of the current market. When using the economic calendar, one should remember that these are estimates based on the historical data. Historical data may be updated or revised depending on various external factors. This calendar can be considered as an important and necessary tool in trading forex.