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In this article, we will look at how economic calendars function and why they are such a useful tool for traders and investors. You will gain an understanding of how to access key economic calendars.
What Is An Economic Calendar?
The economic calendar demonstrates the scheduled dates for the release of economic information that holds significant influence over the financial markets. The financial markets can be described as a news-driven supply and demand vehicle. Hence, the release of significant news or economic events will drive price fluctuations within the market.
Economic calendars can be accessed at no cost on various sources, including websites such as investing.com, DailyFX, and so forth. Economic calendar also available from Lion Brokers website.
There are many traders and investors that utilize the economic calendar to access the latest economic information in order to make informed investment decisions and predict market trends. This is where the economic calendar can help.
What Information Is Typically Found in Economic Calendars?
Economic calendars contain schedules and details on a wide range of influential events and announcements. These calendars include the following major data categories:
Central Bank Policy Decisions
These refer to the announcements made by central banks such as the Federal Reserve, European Central Bank (ECB), and Bank of England regarding changes in interest rates, shifts in monetary policies, and their outlook on the economic conditions. These announcements are essential to traders because they can cause market volatility on a global scale. For example, when a central bank raises interest rates, it generally slows down economic activity and can lead to lower inflation. Discover more here.
Economic Indicators
These contain important reports related to gross domestic product (GDP), unemployment rates, inflation, consumer spending, housing, manufacturing activity and so forth. Economic indicators provide insight into the overall health and direction of the economy. Their release can trigger substantial market responses.
Geopolitical Events
These events are incidents that are influenced by the political interactions and decisions made by different countries or regions on the global stage. These events can significantly affect traders' sentiment and the movement of assets in financial markets. Geopolitical events include elections, regulatory changes, global summits, and political instability. For instance, national elections, such as presidential or parliamentary elections, can introduce new leaders and government policies. The outcomes of these elections can lead to changes in economic and foreign policies, subsequently affecting business environments, trade relations, and market conditions.
Confidence Indices
It is often based on sentiment surveys such as consumer confidence reports, which serve as leading indicators in economics. These indices aim to measure the confidence and optimism of the general public or specific segments of the population regarding their financial and economic prospects.
Economic Calendar Interface Navigation
When it comes to Economic Calendars, user-friendly interfaces play a crucial role in reducing information overload and enhancing visual efficiency. Economic calendars typically contain the following information:
Date and Time: The scheduled release date and time of economic events or data.
Country or Region: The location associated with the economic event.
Impact Level: This indicates the expected influence of the event on the financial markets, often categorized as low (1 star), moderate (2 stars), or high impact (3 stars).
Event Description: A brief description of the economic indicator, report, or event.
Actual Data: The actual result of the event expressed in numerical terms. Red color indicates a lower number than what was forecasted, and green color represents a higher number than forecasted expectations.
Forecast Data: Analysts typically reach a consensus regarding the forecasted outcome of the event before it actually occurs. As traders will see in the ‘actual’ column, these forecasts are frequently not exact, but rather provide an outcome indication.
Previous Data: It is the actual value of the previous same event. In the case of a MoM event, for example, the previous value will show the actual value of the previous month.
Benefits Of Using An Economic Calendar
Timely Decision-Making
Traders and investors can plan ahead and make well-informed decisions based on the release of important economic data. For instance, having prior knowledge of when a central bank will announce its interest rate decision enables you to adjust your strategies accordingly.
Effective Risk Management
Monitoring events such as GDP releases, CPI, PPI, employment reports, and inflation data allows traders to anticipate potential market shifts and make necessary adjustments to manage their risk effectively.
Volatility Awareness
Events like interest rate decisions or political announcements have the potential to introduce market volatility. Remaining informed about these events through an economic calendar empowers you to prepare for sudden price fluctuations.
As a conclusion, economic calendars offer a schedule of upcoming economic events, data releases and announcements that have the potential to influence financial markets. They commonly provide a filterable ‘overview’ that enable traders and investors to determine which event holds the greatest significance, allowing them to explore these events in more detail.
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