Economic Calendars: What Do They Do and How Do They Work?
Economic calendars provide a chronological list of economic events and their potential impact on the financial markets. They are easy-to-use, and they are valuable resources in a trader’s toolbox.
Any news that can influence the financial markets is deemed an economic event. These include, but are not limited to government statements, economic reports, or geopolitical events that can shape the financial arena.
Of particular importance are country-issued announcements such as GDP (Gross Domestic Product), inflation figures, unemployment figures, non-farm payrolls, consumer sentiment, housing starts, election results, and related news stories.
You will notice that high-quality economic calendars also showcase low-impact economic events, medium-impact economic events, and high-impact economic events. These are designated according to their likely effects on the financial markets. Some economic events are limited in scope, while others have broad-based impacts.
Stakeholders who consult economic calendars include the likes of retail investors, institutional investors, brokers, banks, and intermediaries, et al. Pretty much anyone who is interested in trading the financial markets is strongly advised to take an interest in economic calendars. They are indispensable tools for planning your trades, since these are drawn up well in advance of major economic events and announcements.
Regardless of the level of experience you have in trading or investing, or your chosen asset class, economic calendars are sacrosanct.
Once you find an economic event listed, you can infer the following:
- The EV (expected volatility)
- A graph/chart featuring historical results
- The date and time of the next economic release
- The date/time of issue, and the source of the data
- The current value, past value, and expected value
- The currency and the sector that is impacted by the economic event
Why Should You Use an Economic Calendar?
Detailed and accurate economic calendars provide plenty of added value to your trading activity, including:
- Certain economic events can heavily impact currencies.
- Plan for upcoming economic events and act accordingly.
- Watch critical movements in economic indicators and assess their impact.
- You can stay abreast of all the factors impacting the financial markets in the present, and anticipate their future effects based on past behaviour.
- Economic calendars feature the main economic indicators which are indispensable for trading purposes.
How to use AvaTrade Australia’s Economic Calendar?
Every trader at AvaTrade has access to an economic calendar. It’s part and parcel of your account. But, you can also find it listed under the Trading Central item under the main menu. The AvaTrade economic calendar can be fully customised to preferences. You can select what news you would like displayed, the frequency of news updates, and your particular time zone. Simply play around with the filters to get the economic calendar to your liking.
With AvaTrade Australia, you have a powerful set of features, filters, and customisation options to get straight to the meat of the matter. We encourage you to make use of the economic calendar in your day trading endeavours.
The beauty of our in-house economic calendar is that you don’t need to navigate out in search of economic news likely to affect the financial markets. You cannot trust the accuracy, credibility, or completeness of other sites – stick with AvaTrade AU, we’re up-to-date.
Economic calendars give you a really good idea of what changes are afoot in the financial markets. They also explain why markets are behaving the way they are. By scrutinising previous values, you get a better grip on the present, and the expected reactions among market participants.
With economic calendars, economic events are divided according to their importance (impact on the markets). Some create ripples in small ponds, while others have the capacity to disrupt the financial markets in a big way. It’s much more than a simple GDP announcement, or an interest rate assessment; it’s the impact that these economic calendar events have on the broader financial markets.
Using Economic Calendars for Fundamental Analysis
Seasoned traders already know how valuable economic calendars are. These types of traders strategise according to present, past, and upcoming economic events. They read the financial news, consult economic calendars, and plan their trades accordingly. You simply have to know when major news announcements are going to take place, in anticipation of price movements.
Here are a few examples of economic calendar events and their potential impact on the markets:
- Interest-rate hike in the US – negative impact on the financial markets, but good for USD
- Lower than expected GDP – generally has a bearish impact on the financial markets, characterised by selloffs
- Higher than expected GDP – generally has a bullish effect on the financial markets, characterised by buying behaviour.
- Rising Inflation – negative for the financial markets, housing markets, car markets, and general economic activity
- Record Jobs Growth – overall bullish in the stock markets, currencies markets, indices, commodities, et cetera.
This type of information forms the bedrock of fundamental analysis. This is the study of forces driving the financial markets, understanding how they function, and anticipating how markets will be affected by them in the future.
Before economic events occur, traders study the state of the economy and examine the effects of similar events on the economy. Based on this analysis, hypotheses are put into play and assessments on the performance of financial instruments undertaken.
Experienced traders typically open positions long before the financial event takes place, in order not to act too late when the economic event is already priced into the markets. This gives you maximum leverage, well ahead of time.
A caveat is in order: Economic events can determine market behaviour, but the complex nature of the financial markets warrants caution. Sometimes, events listed in an economic calendar do not have the desired effect on the financial markets. For this reason, it’s best to broaden your field of knowledge by reading as much as possible, being receptive to learning, and using demo trading accounts to put your theory into practice.
Consider the United States Bureau of Labor Statistics, otherwise known as the BLS. On the first Friday of every month, they release employee numbers. They exclude specific sectors, including nonprofits, agriculture, and government workers. This non-farm payrolls report (NFP) is critical to economic performance. In fact, as much as 80% of the US workforce is categorised in this non-farm payrolls report.
Traders and investors far and wide eagerly anticipate the NFP reports. There are expected values and actual values which are measured against one another. It’s the deviation from the expected values that determines the degree of pivot with pricing. The greater the difference between the expected value and the actual value, the bigger the impact. Bullish price movements follow positive surprises and bearish price movements follow negative surprises.
Put simply, when more people are unemployed, this is bad for the economy. When more people are employed, this is good for the economy.
TradingView Economic Calendar
* Any reliance you make on the economic calendar is strictly at your own risk, as we make no representations or warranties as to its completeness or accuracy.
FAQs about Economic Calendars
Why are economic calendars important?
If you look at the economic events listed on an economic calendar, you will quickly appreciate why these resources are so important to traders and investors. The economic events such as GDP, inflation, non-farm payrolls, interest rates, central-bank announcements, trade balance data, and other important macroeconomic variables have the capacity to move the needle in a big way. Of course, certain economic events have an outsized impact on specific sectors/industries, or segments of the market, while others are broad-based. Positive reports can boost markets and negative reports can suppress markets. By staying ahead of the curve, you can manage your trades accordingly.
Why should I trust AvaTrade’s economic calendar?
We are one of the world’s premier online trading brokerages. We have extensive experience in the financial markets, with a wide range of underlying instruments. Our teams of expert traders, investors, analysts, economists, statisticians, and managers pour over economic data releases on a daily basis. Their collective know-how is invaluable, and they compile the AvaTrade Economic Calendars for your express benefit. These calendars are detailed, up-to-date, and dynamic. Any changes that may take place are immediately reflected in the economic calendars, to ensure that you are always one step ahead in your trading activity. You don’t have to navigate out to find information – it’s all included as a complimentary benefit for you.
How should you use an economic calendar?
An economic calendar lists all sorts of upcoming economic events, of varying importance. The most important economic events will be highlighted accordingly. These are the ones that have broad-based impacts on the financial markets. To get the most out of an economic calendar, you should scroll through the upcoming announcements, and gauge their importance on your trading activity. The biggest news has the broadest effect on the financial markets. Major global economies like the US, the EU, and the UK have a much more significant effect on financial markets than smaller countries with less importance on a global scale. Use the information to guide your trading and investing decisions. Act swiftly and decisively, ahead of time to benefit from the full impact of economic event.
Use your newfound knowledge of economic calendars to trade your preferred financial instruments.