International economic data, sentiment indicators and monetary policy events act as key drivers on the financial markets. You can use an economic data calendar to adequately prepare for the publications with the greatest potential for movement, which therefore acts as an important companion for traders and investors around the globe.
Below you will find an overview of the most important economic indicators that you should have on your radar.
Central bank meetings
Changes in key interest rates, such as those of the US Federal Reserve or the European Central Bank (ECB), can have a decisive impact on the global financial markets.
Key interest rates represent the interest conditions under which credit institutions can borrow liquidity from central banks. They are therefore one of the most important monetary policy instruments. In this context, the monetary authorities can influence the economy and business cycle in order to curb inflation or stimulate economic growth. The primary objective is price stability.
1. Example: Possible effects of an interest rate cut by the Fed
The reduction in the key interest rate may be at the expense of investments that yield interest. At the same time, the US dollar is likely to become less attractive in this context.
2. Example: Possible effects of an interest rate hike by the Fed
In turn, an interest rate hike by the Fed should play into the hands of interest-bearing investments such as US government bonds. As a result, the US dollar may strengthen.
Not to be forgotten are the press conferences that usually take place immediately after the announcement of the interest rate decision. Investors should monitor the comments made by the central bank's top representatives for monetary policy clues, as these can provide important information.
US labor market data (Non-Farm Payrolls)
The official US labor market (Non-Farm Payrolls=NFPs) is usually published on the first Friday of each new month and provides information on employment figures in the private sector in the United States. Agriculture, domestic workers and employees of non-profit organizations are excluded.
It is also important to look at the unemployment rate, which indicates the proportion of unemployed people in relation to all potential employees available for the labor market. The development of average hourly wages can also be useful, as this can provide an indication of a so-called wage-price spiral.
Market expectations for the NFPs are usually published in advance and should therefore be closely scrutinized. The publication of the US jobs report is still one of the most important events in the monthly cycle.
Worth knowing: The ADP jobs data from the private service provider Automatic Data Processing is usually published two days before the official US labor market report is released, which can provide an initial foretaste of the NFPs.
Gross domestic product (GDP)
The Gross domestic product (GDP) provides an overview of the total value of all goods and services produced for final consumption by the economy in question within a specific time frame. In this context, GDP is regarded as a measure of economic growth and therefore as one of the most important indicators for the economic development of the respective country or region.
Inflation figures
Inflation acts as an indicator of price increases and the correlating devaluation of money. Inflation occurs when the money supply increases disproportionately in relation to the real supply of merchandise. This development results in rising prices for consumer and capital goods. The consumer price index, which is based on the general cost of living, is generally regarded as an indicator for the development of inflation.
Consumer prices and US inflation figures are calculated using a basket of goods and services for an average household in the USA.
Worth knowing: Both the Fed and the ECB are aiming for an inflation rate of 2.0% in the medium term. One of the central banks' most important goals is price stability.
A higher-than-expected consumer price index can lead to rising US dollar exchange rates and vice versa, which in turn can have an impact on the global financial markets.
Worth knowing: Displaying business news in the TWS and CapTrader app
In all CapTrader trading platforms, you can display economic news according to your individual interests and thus always have the latest economic news at a glance. In the example below, we show you the view of the NEWS module in the classic TWS view, which you can freely configure. In the example, the focus is on portfolio news and earnings.
US crude oil inventories
The development of US crude oil inventories can be seen as an important measure of activity in the US economy. Oil inventories are published by the US Energy Information Administration (EIA). As the USA is one of the most important producers of crude oil, this data can have an impact on the global market price and inflation expectations. Rising crude oil inventories signal an increase in supply, which can lead to falling oil prices if demand remains the same, and vice versa.
Conclusion: The economic data calendar is an important companion for investors
It should be noted that traders and investors should keep an eye on a whole host of economic data. In addition to monetary policy events, for example, important economic data also has the potential to exert a significant influence on market developments.
With the help of an economic data calendar, investors can adequately prepare themselves for trading, making it part of every trader's basic equipment.
