How to Read the Forex Economic Calendar

Are you a forex trader looking to stay ahead of the market and make well-educated trading decisions? A forex economic calendar is a tool with several data points and events that can give you some ideas for where the forex market might go. In this post, we'll break down everything you need to know to master the forex economic calendar and get ahead of the curve. Let's dive in and get started.

Get Started

Earn cash back on your FX trades

Open an account in as little as 5 minutes. Spot opportunities, trade and manage your positions from a full suite of mobile and tablet apps.

Get Started

Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Show More

What is the Forex Economic Calendar?

The forex economic calendar is a schedule of upcoming economic events and data releases from major economies worldwide, often offered for free on top financial websites. The calendar lists important financial market events, such as interest rate decisions, GDP reports, employment data and inflation numbers. It also shows the date, time and importance of each economic event and the expected and actual values of the economic data. Some economic events are more market-moving than others, so traders pay close attention to the level of impact assigned to each event on the economic calendar.

What is the Purpose of the Forex Economic Calendar?

The economic calendar provides traders with a comprehensive schedule of economic data releases and events likely to affect the forex market significantly. By keeping track of these economic events, traders can anticipate and prepare for market-moving events in advance and plan their trades accordingly. Data-driven trading decisions help traders manage their risks and achieve better outcomes.

What Information Does the it Provide?

The forex economic calendar provides information such as announcements from central banks, government reports, gross domestic product (GDP) data and other forex news that can affect the value of currencies. Other supporting information that traders can expect to find on a forex economic calendar include:

• Economic events and releases
• Dates and times
• Importance level
• Previous, forecast and actual results

Why Understanding the Calendar is Important for Forex Traders

Understanding the economic calendar is crucial for forex traders as it provides valuable information about upcoming economic events, which can impact financial markets and exchange rates. It lets traders know what will happen and when relative to their trading activities. By keeping an eye on the calendar, traders can adapt their trading strategies accordingly, manage risk, identify trading opportunities, gain a competitive edge and optimize their returns. 

How to Read the Forex Economic Calendar

To read the forex economic calendar, you must understand the basic layout. Economic calendars typically show the date and time of the upcoming events; the currency impacted; the event name; the type of event; the country of origin; the importance of the event; and the actual, forecasted and previous values of the event. Here's how to decode it:

• Date and time: The forex economic calendar displays the date and time of the economic event release in your local timezone. You can set your timezone by clicking the "Timezone" option and selecting your choice. 

• Event type and name: This information will help you to identify the type of event, such as a central bank interest rate decision, employment data, inflation data or other economic indicators. 

• Currency impacted: The forex economic calendar indicates the currency or currencies likely to be affected by the upcoming event, which helps you determine which currency pairs to focus on. 

• Event description: This metric explains the event, its importance and how it could impact the market. The event description includes the economic indicator's previous, forecasted and actual values. This information is essential for traders to predict market changes and tweak their strategies accordingly. 

Most Important Events on the Economic Calendar

The most important events on the forex economic calendar generally include:

• Interest rate decisions: Central banks hold regular meetings to decide on their country's interest rates, which can significantly impact the value of their currency. For example, when a central bank raises interest rates, it can increase demand for that currency, making it more valuable. 

• GDP: This metric measures a country's economic output and is a key indicator of economic growth or contraction. Changes in GDP can impact currency prices as they provide insight into a country's economic health. 

• Nonfarm Payrolls (NFP): This measures the number of people employed in the U.S., excluding farm workers, government employees and non-profit organizations. NFP is often seen as an indicator of the overall health of the U.S. economy and is closely watched by traders as a potential market-moving event.

• Consumer Price Index (CPI): The CPI measures the change in the price of goods and services in a country over time. It is used to gauge inflation, and central banks often use this data to help make monetary policy decisions. High CPI readings can increase interest rates, which can cause a currency to appreciate.

• Purchasing Managers' Index (PMI): This measures the economic activity of purchasing managers in the manufacturing and services sectors. PMI is often seen as an indicator of economic growth or contraction and can impact currency prices. A reading above 50 is considered to be an indication of economic growth, while a reading below 50 shows a contracting economy. 

Tips for Using the Forex Economic Calendar

An economic calendar lies at the heart of fundamental analysis, making it vital to familiarize yourself with it. Here are some high-level tips for using the forex economic calendar:

• Understand the importance of economic events: The calendar lists past and future economic events, such as jobs data and purchasing managers' indices. Traders must understand these events to be able to adapt their strategies accordingly.

• Determine the time zone and country/region: Traders can customize the calendar to their time zone and select the countries or areas they are interested in, helping them focus on the events that matter most to them. 

• Check the level of market influence: Events in the calendar are ranked low, medium or high according to their level of market influence. Traders can use this information to determine the events that will most likely move the market.

Guide your Trading with the Forex Economic Calendar

The forex economic calendar lists upcoming economic events and data releases affecting financial markets. The calendar shows the date, time, currency impacted, event type and name and country of origin. Important events include interest rate decisions, GDP reports, NFP, CPI, PMI and retail sales. Highly customizable, traders use the economic calendar to anticipate and plan for market-moving events, adjust their trading strategies accordingly, manage risks, identify opportunities and avoid being blindsided by event risks. 

Frequently Asked Questions