Understanding Economic Calendar Data

An economic calendar is often used by financial investors to track market-moving news events, including government and central economic policy decisions and economic indicators. Market-moving news events, which may be released or announced in a financial report, carry a very high level of risk for investors who buy and sell on the same day. Therefore, it is essential for investors to stay abreast of market developments both locally and internationally. This calendar will highlight some of the more important international and local events that affect the global economy.

The fourth quarter of 2021 was marked by the start of the first global economic slowdown since the start of the industrial revolution in the 1700s. Uncertainty regarding the health of the American economy caused major impact on currencies all around the world. The American economy contracted in the first half of the year, compared to predictions of an expansion, and the Swiss economy contracted similarly.

The first indications of slowing growth were released by the European Central Bank (ECB), which cut the key interest rate by 1.0% at its latest meeting. The Swiss economy contracted slightly in the second quarter of the year, following a record low in the first quarter. In Canada, the release of the October consumer price index (CPI) sparked a mini economic crisis when rates spooked at their lowest in almost two years. The resulting negative impact on currency rates forced many Canadian banks to tighten their lending requirements, reducing credit facilities to borrowers.

The release of the third quarter’s GDP figures also confirmed that sluggish economic activity in the United States was continuing. On a brighter note, according to the economists’ economic calendar, U.S. consumer spending growth picked up in the third quarter of 2021. Consumer confidence boosted by the recovery in the housing market and rising employment figures also contributed to the increase in consumer spending. The release of the unemployment report last week, however, suggested that job gains may have slowed in the fourth quarter of the year. While consumer spending is one of the driving forces behind the U.S. recovery, rising employment levels and higher inflationary pressures elsewhere in the world may weigh down on U.S. growth in the fourth quarter of this year.

The key indicators used by traders to assess global economic activity include U.S. trade deficit, European trade surplus, Japanese trade surplus, Swiss trade surplus, and British economic growth. According to these calendars, the fourth quarter of this year will feature the expected continuation of the downward trend in U.S. trade deficit. This means traders will need to watch the direction of this deficit and whether it leads to more trade surplus creation or possible contraction of gross domestic product (GDP).

The release of the FOMC minutes from its meeting earlier this month also provided traders with some confirmation of current economic news events and the direction this news could take. According to the economic calendar, the minutes indicate that the current guidance for the U.S. economy indicates that rates may remain on hold at least through the second half of the year. Furthermore, a reading on the minutes indicates that the risks to the outlook for the U.S. economy remain negative but traders can expect a continued increase in market volatility as the U.S. central bank continues to look for accommodative measures to unwind the balance sheet. Both these readings indicate the continuation of low rates until the end of the year.

Apart from the data releases from central banks, the economic calendar gives traders plenty of other data sources from which to make their analysis. Traders can examine emerging indicators from various sectors including industrial manufacturing, agriculture, oil and gas, travel and tourism, and financial markets to determine the direction of global economics. From the data available, however, it is not possible for every trader to incorporate the seasonal trends in the markets and determine the direction of international trade.

Economic calendars have been useful tools for investors for years, helping them to evaluate short-term fluctuations in the market without needing to rely on outside factors. In addition, historical forex calendars are helpful tools for investors who want to better understand the historical trends associated with certain currencies over time. Historical forex calendars are also useful for traders who want to know more about the behavior of the market and how different variables influence the volatility of the currency pair price. Understanding the relationship between forex economic calendars and other market indicators can give forex investors an edge in making more informed decisions about which currencies to trade.