One of the best trading tools you can use as a forex trader is an Economic Calendar. It might take you a few minutes to review the calendar every day, but those few minutes will determine how good of a forex trader you will be.
The economic calendar will display the latest scheduled news and other data releases related to the economy and financial markets, including gross output, NFP numbers, and interest rate decisions.
There will be several economic data releases on a weekly, and sometimes, daily basis. These events will be listed together with their scheduled dates on the economic calendar. Events that have a significant impact on the market are marked with orange dots (medium impact), and those with a high expectation of significant market impact are marked with red dots (high impact) to indicate the importance of news or data releases.
Below, you can see the Forex economic calendar to know more about important economic events in the forex market in order to make better trading decisions.
Fundamental analysis in forex trading allows you to see the developments of economies around the world based on the data of individual economies (e.g., GDP, consumption data, and inflation). In this way, you get to observe which countries trade their currencies the most. Do this every day for the latest economic news that may have an impact on the world's currencies.
Now, let's take a closer look at some of the important economic events that drive the prices in the forex market.
📅 Gross Domestic Product (GDP)
The GDP report is one of the most important economic indicators. It is the largest measure of the overall state of the economy. The GDP figure is released at 8:00 AM ET on the last day of each quarter; this figure reflects the activity of the previous quarter. The GDP is the sum total of the monetary value of all the goods and services produced in the entire economy during the quarter, except for global activities. The growth rate of GDP is an important number to consider.
📅 Trade Balance
The trade balance is a measure of the difference between the import and export of tangible goods and services. The level of a country's trade balance and changes in export versus import is highly anticipated as important indicator of the overall economic strength of the country. It is always better to have more exports than imports because export helps the growth of the economy and reflects the overall health of the manufacturing sector.
📅 Consumer Price Index (CPI)
The Consumer Price Index report is a widely used measure of inflation. The CPI report is released at 8:30 AM ET on the 15th of each month and reflects the data for the previous month. The Consumer Price Index measures the changes in the cost of several consumer products and services from month to month.
📅 Producer Price Index (PPI)
The producer price index and consumer watch index are two of the most important measures of inflation. The CPI report is released at 8:30 AM ET during the second week of each month and reflects the data for the previous month. The producer price index measures the price of goods at the wholesale level. In other words, the PPI measures how much the producers earn for their goods, while the CPI measures the costs paid to consumers for the goods.
📅 Employment Indicators
The release of the most important employment data occurs on the first Friday of each month at 8:30 AM ET. The statement includes the unemployment rate, which represents the percentage of the unemployed labor force, the number of new jobs created in the market, the average working hours worked each week, and the average hourly wage. This report usually creates significant movements in the market. You will often hear traders and analysts talking about Non-Farm Employment (NFP) and it is probably the only monthly report that has the biggest impact on moving the markets.
📅 Standing Purchase Order
The Standing Purchase Order report gives a measure of how much people spend on long-term purchases, which are defined as merchandise exported to last more than three years. The report is released at 8:30 AM ET around the 26th of each month and is believed to provide some predictions about the manufacturing sector.
📅 Retail Sales Index
The retail sales index measures the goods sold in the retail market from large chains to small local stores and takes measurements for many retail stores across the country. The retail sales index report will be released at 8:30 AM ET around the 12th of the month, and it reflects data from the last month. The report is often revised after the final numbers are released.
📅 Housing Data
Housing data includes the number of new homes the country started building during the month as well as sales of existing homes. Residence construction activity is a great reason to stimulate the country’s economy and is therefore widely anticipated by forex participants. Existing home sales are a good indicator of a country's economic strength, while low existing home sales and low new home starts are usually an indication of a slow or weak economy.
📅 Interest Rates
Interest rates are the main driver of the forex markets. All of the above economic indicators are closely examined by the Federal Open Market Committee to see the overall health of the economy. The FOMC can lower or raise interest rates or leave them unchanged, based on the evidence collected about the health of the economy. Even though interest rates are the main driver of forex price movement, all the aforementioned economic indicators are also important.
