Economic calendar

An economic calendar is a chart or schedule of past, present and future key figures, economic sets, and data releases from various countries around the world that reflect economic conditions. It will have data and information on various aspects of economic activity including job employment rate, Interest rates, Retail Sales, GDP, CPI, PPI and a mix of important and other not-so-important indicators.

Information in Economic Calendars

Economic calendars will contain many things for traders and investors to research. Some of the more important information traders will be looking for are the following:

Consensus: Most calendars will show the name of the release, which country is releasing the data, implied volatility and also a consensus or predicted number for each release. The figures are important because missing or beating the consensus can greatly impact market price. Often, there will be a colour coding where a beat of the actual figure will show in green text and a miss will show in red text for example.

Previous: This is the previous reading or number from the last time the data was released. Traders can see whether the data is improving or getting worse and take some time to determine if there are any trends or patterns emerging. Sometimes the previous data is revised which can be a contributor to market volatility which traders will want to be aware of.

Volatility/Importance: This is helpful when you want to see what the expected market impact will be. Typically, the level of importance the data is expected to be will be represented with a specific colour. For example, a high-impact expectation release might be colour-coded red, medium-impact orange, and low-impact yellow. Some calendars may give you the option to only show high-impact events for example.

Alerts/Countdowns: A countdown will show traders how much time is left until the dataset is released. Typically, alerts can be set as a sound or a desktop notification to announce when the data has been released. Usually, the alert will show the numbers from the data release as well.

Time Zone: Typically, this can be changed to whatever time zone that the trader resides in so that you don’t need to be making time zone conversions in your head trying to figure out when an important data release is happening.

Country: Most calendars will have a country filter that allows the trader to choose which country’s data they are interested in. If a trader primarily trades US currency pairs then they may not be interested in Turkish data for example. In this case, the trader may want to filter out Turkish data.

Timeframes: Typically the default options are; Today, This Week, Next Week, Previous Week, etc. Many calendars have a customizable option where the trader can select separate date ranges as well.

Who uses Economic Calendars?

Economic calendars are used by virtually all participants in the financial markets such as day traders, investors, hedge funds, regulators and speculators just to name a few.

An example of how a long-term investor might use an economic calendar is by gauging whether or not they should review their asset allocation because of the way the indicators and economic data are trending. For example, if leading indicators are showing that an economic contraction is shaping up, then the investor may need to think about reallocating their portfolio towards a lower-risk approach. However, if leading indicators show signs of economic expansion, then the investor might need to think about reallocating their portfolio toward higher risk to take advantage of the prevailing market conditions.

Another example is when traders or day traders attempt to time their trade ideas with the release of economic data. Some traders like to jump into trades ahead of the release of economic data because they have a strong opinion on what the actual numbers will be and therefore want to take advantage of the anticipated price volatility.