An economic calendar is commonly used by traders to track market-moving trends, including government policy decisions and economic indicators. Market-driven events, which are generally formally announced or released in some kind of report, usually have a very high likelihood of influencing future market activity. As such, it can be a good tool to help determine which direction a particular industry may be moving. However, this calendar can be somewhat misleading because of the fact that it doesn’t take into account everything that influences the economy.
For instance, although the FOMC has stated that it will raise interest rates only once the unemployment rate exceeds 4%, experts believe that this is unlikely to occur anytime soon. One of the reasons why there is still considerable uncertainty about the timing of further hikes is the fact that the effects could differ across sectors. Another drawback is that the impact on inflationary pressures and market perceptions may vary depending on the regional differences between economic areas.
Most market professionals understand the importance of market indicators, including unemployment figures, inflation rates, balance of payments, and other economic calendar indicators. Unfortunately, they are often overlooked or even dismissed by many traders because of the way they are presented on the charts. Economic calendars provide comprehensive information about various indicators but make it hard to read and interpret. As such, traders become preoccupied with the latest news or economic event, leading them to overlook important indicators like price changes, balance of payments fluctuations, and so forth.
There are several types of economic calendars. Most traders focus on two basic types: real time series and index of demand. Real time series are simply the most recent values of economic indicators; for instance, the opening and closing statements of any particular month, the gross domestic product growth, and the balance sheet. These are considered to be fairly reliable indicators, especially if they are released regularly.
Index of demand estimates are a bit trickier, as they tend to change significantly from time to time. It is essential, however, to always refer back to the index of demand when considering the economic calendar, particularly if the indicators are updated frequently. These estimates can help determine which economic events may affect the overall market, and the behavior of individual industries. For instance, it is possible to predict the direction of interest rates in the future. However, index of demand estimates are based on a number of different factors, including consumer spending habits and business sales.
Other useful indicators can also be derived from economic calendars, including the consumer price index (CPI), gross domestic product (GDP), and employment rate. All three of these indicators are important for understanding economic developments in the markets. Consumer price index, for example, reflects increases in the cost of items purchased by consumers. Gross domestic product indicates growth in the economy; the employment rate reflects employment levels. Taken together, all three indicators are very reliable guides to an accurate prediction of overall economic performance.
The indicators covered above are only a few of the many available to investors looking to make educated decisions about their portfolio. Many other variables are included in economic calendars. One such variable is inflation. While it is difficult to make predictions about future inflation, it is easy to determine how current inflation rates are trending. Indicators like this can provide valuable information about the health of an economy.
Of course, the usefulness of an economic calendar does not stop there. Indicators are just one way that investors can evaluate an economy. A more powerful tool is to analyze data from many different sources, including government, private, and international sources. Doing so allows investors to weigh the long-term effects of various policies and economic policies. The best time to implement an economic calendar is when all of the relevant data has been examined and a good analysis has been made.