An economic calendar is one of the most invaluable tools for forex traders around the world. However, for beginners, an economic calendar can initially appear very confusing. We will emphasise the importance of key economic indicators from the three major economies that have the most significant influence on the forex market: the US, UK, and the Eurozone.
- Gross Domestic product (GDP): This represents the total monetary value of all goods and services produced within a country. The GDP serves as a barometer of that country’s economic health, indicating whether it is experiencing growth, slowing down, or contracting.
- Non-Farm Payroll (US): The nonfarm payroll represents the total number of paid workers in the U.S. excluding employment in the farming sector.
- Unemployment Rate: This provides insights into a country’s job market. It is calculated by dividing the number of unemployed individuals by the total labour force.
- Inflation: The inflation rate is the rate at which prices for goods and services increase over a specified period. The most commonly used indexes are the Consumer Price Index (CPI), Wholesale Price Index (WPI) and Producer Price Index (PPI).
- Consumer Confidence: This indicator gauges the level of optimism that consumers have regarding the state of the economy. It is particularly important for economies driven by consumer spending such as the US and UK.
- Central Banks: Interest rate decisions by central banks are significant, with the decision by the US Federal Reserve being the most important. This is mainly because it regulates the flow of the US Dollar, and the US stands as the world’s largest economy.
- Retail Sales: Growth rates in retail sales indicate changes in the overall value of sales at the retail level. Given that retail sales reflect a substantial part of overall economic activity, it is considered as the most relevant indicator of consumer spending.
- Industrial Production growth rates: Usually measured on a monthly basis, industrial production growth rates express change in the total output value across manufacturing, mining, electric and gas industries.
Several of these macroeconomic indicators, featured in an economic calendar, are important to forex traders who use fundamental analysis.
