The Forex News Calendar: An Imperative Tool for Traders

The Forex News Calendar: An Imperative Tool for Traders

Reading time: 6 minutes

Like a plumber who requires a specific toolset to operate effectively, traders and investors need an economic calendar.

Economic data can have wide-ranging implications for the foreign exchange market (Forex market) and the broader financial markets. The economic calendar’s sole purpose is to provide a register of scheduled global economic data consisting of projected low-impacting, medium-impacting and high-impacting event risk.

Traders largely focus on high-impacting data, events that have the potential to significantly increase volatility across the currency market. These include central bank announcements, such as interest rate decisions from developed nations like the US (the Federal Reserve [Fed]), the UK (Bank of England [BoE]) and Europe (European Central Bank [ECB]), as well as Consumer Price Index (CPI) inflation data, the Gross Domestic Product (GDP) and employment figures (non-farm payrolls out of the US, for example). However, medium-impacting releases, including retail sales data, consumer spending and business sentiment gauges, can affect market volatility and are, therefore, worthy of note. Data that seldom move the markets – low-impacting data – are largely overlooked by traders and investors.

Forex News Calendar: Must-Know Features

While it takes time to understand the meaning and importance of each economic indicator and its connection within the overall macroeconomic space, the key points on an economic calendar to be aware of are the ‘Actual’, ‘Forecast’, and ‘Previous’ values and what they can mean for currencies.

As shown on the economic calendar in Figure 1, provided by Trading Central at FP Markets, the Previous value is highlighted in the column coloured red, the Forecast value is in green and the Actual data are released in the section highlighted in yellow. This is largely how most economic calendars are organised, though it is worth highlighting that some calendars display the estimate high and low for each event. This can be particularly useful for scalpers.

The Previous data (red) are, as its name implies, prior values according to the frequency that the data is released, usually monthly or quarterly. The Forecast values are derived through polls; these polls usually consist of top economists at major institutions (this is certainly the case for Bloomberg as the platform lists the names of the economists and traders that have provided their projections). After collecting the forecasts, the median estimate displayed on most economic calendars represents the forecast, the data point that lies in the middle of the dataset once it has been organised in ascending order. Finally, the Actual data is simply the reported outcome at the release date and time.

The Actual value and the Forecast value are the two primary data points traders must understand on the economic calendar. A deviation in these two figures is behind some of the fiercest moves in exchange rates. For example, Figure 1 shows that the US GDP (Gross Domestic Product) for Q1 2024 will be released at 1:30 pm and the Forecast is 1.6%. With economists expecting this event to be 1.6%, any notable deviation, say 1.3% to the downside (usually referred to as a ‘miss’) or 2.0% to the upside (a ‘beat’), could have an immediate effect on the US dollar.

Figure 1: FP Markets Trading Central Economic Calendar

Still using Figure 1, as alluded to at the beginning of this post, the calendar classifies data as either high-, medium- or low-impacting events. Economic data likely to elevate volatility in related currency pairs will be labelled as high impact (red on this calendar). As a reminder, high-impacting events are generally what most traders centre their focus on, though there are times when medium-impacting events can move the Forex market considerably. To the left of this ‘importance’ marker, the event’s name and country, as well as the time of the release, is observable. This is where you will see what month or quarter the data measures (Q for quarterly data, for example, or the month it measures).

Also worthy of understanding, with the FP Markets Trading Central calendar, are the metrics that measure historical Actual and Forecast releases, shown in the grey box to the far right of the economic event in Figure 1. Here, you will find a volatility component that measures the historical impact (this can be filtered from 5 minutes after the event up to 4 hours) and an impact assessment of previous events. An example of the Impact chart is shown below in Figure 2.

Most of the features on economic calendars can be filtered to suit your preferences and time zone.

Figure 2: FP Markets Trading Central Economic Calendar

Although it takes time to understand the workings of an economic calendar and the indicator’s meanings, it is time well spent. Even if you trade the Forex market solely using technical analysis, understanding when upcoming data is released and its importance is recommended, as high-impacting data can alter active (and prospective) trades and quickly turn a winning position into a losing one.

 Economic Calendar FAQs

1.  What is an economic calendar?

An economic calendar highlights scheduled economic data that can affect the Forex market.

Most economic calendars structure the data according to date and time, importance, as well as providing Actual, Forecast and Previous values. Importantly, the economic calendar can be filtered to suit your personal preferences.

2.  What are the most important factors on an economic calendar?

For a trader, the most important features on an economic calendar are the Actual and Forecast values.

3.  Where can I access an economic calendar?

Trading with FP Markets opens the door to a premium Forex News Calendar through Trading Central. Not only do you have the usual data you’d expect from most calendars, but you also have additional features that assess volatility and impact.