10 most important economic calendar events to trade

What is an economic event?

Before we dive into the specifics, let's first understand what an economic event is and why it is relevant to trading. Economic events are public releases of information that have the potential to impact market prices. While some events may have a more specific effect on individual stocks or sectors, major news announcements can have sweeping effects on the entire market, including stocks, currencies, commodities, and interest rates. Even if economic news has little impact in the long run, data releases can often cause short-term volatility that day traders look to capitalize on.

Discover more on trading the news and fundamental analysis

The 10 most important economic events for forex traders

1. FOMC Meetings: The Federal Open Market Committee (FOMC) meetings are held around ten times a year and play a significant role in shaping monetary policy in the United States. Traders pay close attention to these meetings as they announce interest rate decisions and provide insights into the state of the economy. Their actions most directly affect US bond markets and US dollar pairs but can influence the stock market as well.
2. Non-Farm Payrolls: Released by the U.S. Bureau of Labor Statistics on the first Friday of every month, the employment situation summary provides crucial information about employment trends in the United States. This report includes the nonfarm payrolls (number of US workers excluding farm workers and other minor classifications) and the unemployment rate (number of unemployed divided by the total labor force). The Fed prioritizes this report as a part of their dual mandate to maximize employment and keep prices stable.
3. CPI Inflation: The Consumer Price Index (CPI) measures changes in the prices of goods and services in the United States. This metric helps guide the other part of the Fed’s mandate, keeping prices stable. Traders monitor CPI inflation data as well because it provides insights into the purchasing power of consumers and can shift expectations in monetary policy decisions.
4. Fed Chair Speeches: Speeches by the Federal Reserve Chair, currently Jerome Powell, can provide valuable insights into the central bank's thinking and future monetary policy actions. While the subject matter they choose to discuss may vary, traders analyze these speeches for clues about potential interest rate changes.
5. European Central Bank (ECB) Meetings: Similar to FOMC meetings, ECB meetings have a significant impact on the euro and other currency pairs involving European economies. Traders closely follow these meetings to understand the ECB's interest rate decisions and its assessment of the euro area economy.
6. PCE Inflation: The Personal Consumption Expenditures (PCE) inflation is another inflation gauge - and the preferred measure of inflation for the Federal Reserve. Traders pay attention to this data point along with CPI to get a monthly pulse on inflation that may influence upcoming monetary policy decisions.
7. Retail Sales: Retail sales data provides insights into consumer spending patterns on a monthly basis, which is a crucial driver of economic growth - especially in times of high inflation. Traders monitor this data point to gauge the health of a country’s economy and its potential impact on currency pairs.
8. Gross Domestic Product (GDP) Growth Rates: GDP measures the total value of goods and services produced within an economy. Traders analyze GDP growth rates to assess the overall health and performance of an economy. However, this data is released quarterly and is often less reactive to ongoing developments than other metrics.
9. Manufacturing Purchasing Managers' Index (PMI): The PMI measures the economic activity in the manufacturing sector. Traders monitor this data point as it can indicate economic expansion or contraction from the side of producers. Often reporting at a balanced midpoint (50), significant deviations higher or lower can cause reactions in markets.
10. Chinese Data: Given China's significant role in the global economy, economic data releases from China, such as trade balance figures, can have a profound impact on global markets. Traders keep a close eye on these data points to gauge the health of the Chinese economy and its potential spillover effects. In forex markets, Chinese data can have a greater impact on neighboring countries like Japan and Australia - often reflecting on USD/JPY and AUD/USD.

It's important to note that the importance of these economic events can change over time, depending on market conditions and evolving economic trends. Additionally, minor news events may only cause a market reaction if data deviates greatly from market expectations. Traders should stay updated with the latest market news to identify potential trading opportunities and adjust their trading strategies accordingly.

In addition to monitoring economic events, traders can also utilize technical analysis and fundamental analysis to make well-informed trading decisions. Technical analysis involves studying price action and using various indicators to identify patterns and trends in the market. Fundamental analysis, on the other hand, focuses on analyzing economic indicators, news releases, and central bank policies to assess the intrinsic value of a currency.

Check out our economic calendar

How to trade economic events

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on forex pairs

Trading economic events with forex requires an account with a forex provider like IG. Many traders watch major forex pairs like EUR/USD and GBP/USD for potential opportunities based on macroeconomic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like IG’s Trading Academy. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.