Daily Digest:
w/c 15 July - Financials earnings reports kick off the week, then we get Netflix results Thursday. US Retail Sales is the standout macro data this week on Tuesday. We also get the latest ECB interest rate decision on Thursday.

What Is An Economic Calendar?

Beginner

An economic calendar is a timetable that is usually arranged in chronological order, similar to a normal calendar, in time and date order, showing important events that could impact financial markets. Economic calendars display upcoming data that is due to be released and also previous economic data, that has already been published. This data is most often listed in date and time order, but can be displayed by country, by importance, or by type of data. Economic calendars are important in trading as they give the trader a time framework around which to organise their trades.

In this article we are going to look at how an economic calendar works, how to navigate and understand calendars, why these calendars are of particular importance for traders and briefly look at the different types of economic calendars that are available.

How does an economic calendar work?

An economic calendar works by displaying many different types of economic data and events that are upcoming and due to be released. The data may be issued by a government or government department, for example the US Department of Labor, or maybe by a supranational authority, like the European Central Bank (ECB), or by the Organisation for Economic Cooperation and Development (OECD). However, there are other sources of economic data too, such as private data producing companies, like Markit, who produce their much-watched Purchasing Managers Index (PMI) surveys.

Speaking events by world leaders and important Central Bank members would also be present on an economic calendar.

Furthermore, in the world on microeconomics, publicly listed companies also publish assorted data on their own company, most often during a quarterly earnings release.

So, you can see, there is a wide variety of potential sources for economic data, that could be valuable to a trader or investor, when doing this analysis and making trading or investment decisions.

Understanding and navigating an economic calendar

In this section we are going to look at how an economic calendar works, so you’ll be able to understand and navigate your way around an economic calendar.

As we have stated above, the economic data points on an economic calendar could be from a wide variety of different sources. Generally, these data points are organised in a grid in date and time order, with upcoming data releases at the top of the calendar. Usually, however, with most calendars it is possible to change the date range, to just look at maybe today’s economic data, or to look at data for the upcoming week, the next month, or even for past week. In fact, many data calendars have the option to be able to customise the date range that you would look like to view.

On most economic calendars, there is usually a column with a flag symbol, a county name or sometimes a countries forex code (for example GBP for the Pound and the UK) to indicate which nation’s economy or which currency might be impacted by the data release in question. This can be a handy tool if you are concentrating on one particular country, or a certain global region. In addition, most calendars will allow you to filter by country or economic region, which allows you to screen out data releases from nations or economic areas that you are not interested in, or that will not impact the market that you are looking to trade.

Another important parameter often seen on economic trading calendars, is a column showing an “importance” factor. This can be displayed in a variety of ways, but is often used to indicate low, medium or high “importance”. Obviously, “importance” can be a very subjective concept, but generally speaking the larger economic nations are seen as more important, in comparison to a developing nation. Furthermore, some pieces of economic data are deemed as more significant than others. Although it would be widely agreed that data such as the unemployment rate, inflation data, and Gross Domestic Product (GDP) are very significant, it is debatable as to how important other economic data releases are. In most instances, the publishers of the economic calendar tend to get this right, but in some cases, it could be argued that they do not. It is important, therefore, that you should educate yourself to have a good understanding of the different economic data releases that could impact any markets you are trading. This way you can appreciate which data points are more important to you and your trading strategy.

An extremely important part of the economic calendar is the name of the data point and its description. Most calendars would often only show the headline name for a piece of data, for example GDP in the calendar. Usually, however, there will also be the option to expand on this field (with a click) to be able to see a far more in-depth description of the nature of the data point.

An important column on the calendar is the current or actual data release. Before the scheduled time of the data release, this field on the calendar will be blank, as it will be unknown. Usually within seconds or certainly within a minute or two of the release of the data, however, this field will populate with the actual data that has been posted.

Arguably the most important column on the economic data calendar is the consensus column. This column contains the expected, consensus number for the piece of data yet to be released. This consensus number is calculated from an average of many different investment institutions, from the projected numbers released by their economic forecasting departments. Broadly speaking, this is the best expectation from the wider market for the piece of data that is due to be released.

The column that contains the previous data, will typically show the last piece of data that was released in this series. So, it would be last month’s data for a monthly data release, but last week’s data point if it is released on a weekly schedule. In addition, with many economic calendars it is possible to click on this data to see historic data for the data point in question, usually viewable in a table and/ or as a chart. Often, this data can be downloaded, so that you can do your own analysis on it.         

Why are economic calendars important in trading

Economic calendars are important in trading because they allow traders and investors to quickly see what is coming up in their current trading day, or maybe look forward to what is upcoming in the weeks or months ahead and exactly when any data is due to be released. Fundamental traders would look to analyse previous data and the consensus data, in order to make a fundamental decision as to whether a market is currently undervalued or overvalued from a fundamental perspective, given the expectations of the data to be released. These calendars are important for traders with a technical analysis approach too, as it may be useful to time trade entry and exit points with knowledge of upcoming economic data releases.

What are some examples of economic calendars?

Here we are going to look briefly at some examples of economic calendars, focusing on:

  • Forex economic calendar
  • Investing economic calendar
  • World economic calendar
  • Daily economic calendar
  • Live economic calendar

Forex economic calendar

A forex economic calendar is one that is aimed with the foreign exchange trader in mind, usually focusing on larger macroeconomic data points. The forex economic calendar will often have a column with a currency code in it, highlighting which currency is likely to be impacted by the different economic data releases.

Investing economic calendar

An investing economic calendar is usually one that concentrates more on microeconomic data releases, that is the earnings and revenue reports. These are usually released by corporates on a quarterly basis.

World economic calendar

A world economic calendar is simply a very broad version of an economic calendar, focusing on any world events that could impact markets. This might incorporate far more data point than a trader may require, covering multiple countries and events. Usually, it is possible to apply filters to a world economic calendar, for you to be able to focus in on the events that might impact the markets that you trade.

Daily economic calendar

Quite simply, a daily economic calendar would just focus on the economic data releases scheduled for the current day.

Live economic calendar

Most economic calendars are live, in that they update in real time as any pieces of economic data are released.

Economic calendar summary

In summary, in this article we have looked at various aspects of economic calendars; what they are, how to navigate one, why they are important in trading, also looking at examples of different types of economic calendar.

The key takeaways:

  • Economic calendars are extremely important as they provide you with vital fundamental information from past and future data and events, alongside the schedule for future data releases.
  • The consensus column is arguably the most important part of the economic calendar, as trading decisions can be made before, during or after the data release, in relation to the consensus number.

To learn more about trading and how to incorporate your knowledge of economic calendars check out our article on trading high impact news

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

Please comment below

Your email address will not be published. Required fields are marked *