Directory Image
This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Privacy Policy.

Why Using an Economic Calendar is Important?

Author: Beshoy Adel
by Beshoy Adel
Posted: Apr 17, 2020

One tool, key to a success when trading Forex is the economic calendar. By using the calendar a trader will get a better understanding why the market is moving in a certain way, while at the same time, he/she will be able to anticipate these moves. As a whole, the biggest market-moving events tend to be the release of key economic data such as the GDP, US non-farm payroll number. While not all of the reactions of the market to these announcements can be predicted they do present excellent trading opportunities.

What to look for in an economic calendar?

Experienced traders examine future economic events on a daily basis in an attempt to predict the movement of a particular currency pair. They usually stay way ahead of the announcements of crucial events and get into action in a respective way, so that by the time a certain announcement is made, they will have already estimated the value of the currency pair they are interested in. A simple, but effective way for traders to keep track of information from events, news or statements is to have an economic calendar at their disposal. By using such a vital trading tool, traders are able to follow key economic and non-economic indicators, which may provide clues of the direction of the market and also be aware of all the events, expected to influence the movement of a particular currency.

Risk Definition

Monetary policy

Monetary policy refers to the process by which central banks and other monetary authorities control the money supply. Each country and economic region has a monetary authority that seeks to promote stability and economic growth within its jurisdiction. One of the ways a monetary authority might do this is by adjusting (either increasing or decreasing) interest rates.1.

Central banks and monetary authorities meet several times each year to discuss current market conditions and determine whether or not monetary policy needs to be adjusted to achieve the desired result of stability and growth. These events are outlined in the economic calendar.

For example, the European Central Bank (ECB) meets every month to discuss monetary policy and determine the appropriate interest rate. The ECB’s Governing Council announces the interest rate decision after the meetings. Investors use the announcement to not only hear about ongoing policy developments, but to forecast future ones.

Monetary policy is formulated and released by central banks and monetary authorities only.

Event frequency

Events listed on the economic calendar are released at different intervals, depending on the nature of the event. Events usually occur weekly, monthly and quarterly (i.e. every three months). The frequency of the event also varies with each country and region.

As a general rule, most events occur monthly. Few events are released quarterly and even fewer are released weekly. Below are some examples.

Weekly Events

  • Initial Jobless Claims (US)
  • Business Outlook (Bank of Canada)
  • M3 Money Supply (European Central Bank)

Monthly Events

  • Unemployment Rate
  • Consumer Price Index
  • Building Permits

Quarterly Events

  • Gross Domestic Product (GDP)
  • Business Outlook (Bank of Canada)
  • M3 Money Supply (European Central Bank)
Rate this Article
Leave a Comment
Author Thumbnail
I Agree:
Comment 
Pictures
Author: Beshoy Adel

Beshoy Adel

Member since: Jan 26, 2020
Published articles: 19

Related Articles