How to Read an Economic Calendar for Forex Trading

What a calendar row actually contains

Every economic calendar shows the same six things, and most people read two of them.

The time is exact and it is published weeks ahead — this is what makes a scheduled release tradeable at all. The currency tells you whose economy is being measured, and therefore which side of a pair is affected. The impact rating is the calendar's own estimate of how much this one usually moves things, and it is a guide rather than a rule.

Then the three that matter: previous, what the measure was last time; forecast, what the market expects; and actual, what it turned out to be. As lesson one put it, the price is repricing the gap between the last two, not the last one on its own.

A single calendar row with its time, currency, impact rating and its previous, forecast and actual columns each labelled — The gap between forecast and actual is the only column that was not already in the price. It is also the only one most headlines leave out. Click to enlarge

How to work a calendar before the week starts

The practical routine is short and it is the same every week.

Filter to the currencies you actually hold. A calendar showing every country at once is a wall of numbers with no signal in it.
Filter to the high-impact rows first, then read the medium ones for the currencies you are already positioned in.
Convert every time to your own clock once, at the start of the week. Getting this wrong by an hour is the most common way a planned trade becomes an accident — and daylight saving moves at different dates in different countries.
Write down the forecast, not just the release. If you have not recorded what the market expects, you cannot tell a beat from a miss when the number arrives.
Note which releases fall in the same minute. Payrolls and average earnings print together, and when they disagree the market has to choose which to believe.

A single release, read across three markets

The clearest demonstration in the source is one Friday session — 2 July 2021 — read across a currency pair, an equity index and gold. Three rows landed:

Spanish Unemployment Change — previous −129.4K, forecast −110.5K, actual −166.9K. A large beat on a regional release, and the euro side of the pair had something to work with before the American numbers arrived.
Average Hourly Earnings — previous 0.4%, forecast 0.3%, actual 0.3%. Exactly in line. On its own this is the release that does the least, because nothing has to be repriced.
Non-Farm Employment Change — previous 583K, forecast 725K, actual 850K. A substantial beat, and the row the whole session was waiting for.

A single employment release read across a currency pair, an equity index and gold, each reacting at the same minute in a different direction — One number, three reactions, none of them the same shape. Which market you were watching decided what the release appeared to mean. Click to enlarge

Why the three charts disagree

They do not disagree. They are answering different questions with the same number.

A strong employment figure says the US economy is running hot. For a currency pair that is dollar-positive, because a hot economy brings forward the interest rate rises of lesson nine, and a currency that will pay more is worth more. For an equity index it is genuinely ambiguous — good for earnings, bad for the discount rate applied to them — and which half wins depends on where the market already was. For gold it is straightforwardly negative, because gold pays nothing and competes directly with a rising yield.

Notice the second release in that list. Average earnings came in exactly on forecast, which is why the session did not resolve until payrolls printed. When a wage number and a jobs number disagree, the market usually takes the wage number more seriously, because wages are what turn employment into inflation.

Streaming news: the half with no timetable

Alongside the calendar runs a stream that has no schedule at all — a central banker answering a question they were not expected to be asked, a supply disruption, a political headline. The source calls these non-events, and the name is exact: they are not on the list of things that were going to happen.

Two consequences follow, and they pull in opposite directions.

You cannot be positioned in advance, so a streaming headline is risk rather than opportunity. This is the argument for a stop that exists before the news does.
The reaction is usually faster and less orderly than a scheduled release, because nobody has pre-positioned and there is no forecast to measure the surprise against. Price finds the new level by moving, rather than by adjusting.
A streaming headline that contradicts a scheduled release usually wins, because it is newer information. A speech that walks back a rate decision moves more than the decision did.

A week with scheduled releases at known times and unscheduled headlines arriving between them without warning — The calendar is a plan for the marked days. The stream is the reason the plan needs a stop on the unmarked ones. Click to enlarge

What to take from this one

Three things:

Read six columns, not one. The time tells you when to be ready, the currency tells you which side moves, and the gap between forecast and actual is the whole event.
One release means different things to different markets, and none of them is wrong. Decide which question your instrument is answering before deciding what the number means for it.
Everything on the calendar can be prepared for. Everything off it is the reason risk is managed before the week starts rather than during it.

Next: what growth does to a currency

Why gross, why domestic, when it is published, and what the same release did to EURUSD and to the Dow on the same afternoon.

Back to the twelve lessons

The economic calendar and streaming news