It doesn’t matter if you’re a short-term or long-term investor. Everyone should be aware of the economic calendar and the impact it might have in the economy.
Despite having a lot of topics to be looked at, there are a few ones which I consider more important when analyzing the economic calendar.
Let’s take a look at them.
Weekly jobless claims are really important as they somehow reflect the state of the current economy by showing the percentage of unemployed people.
With this data and previous ones, we can more or less predict or have an indicator of how the economy is evolving in the short-term (even though the future can be the complete opposite of what we expect always).
A continuous decreasing rate means the economy is getting healthier whereas an increase rate means the opposite state.
Unlike jobless claims, Housing Starts are not presented on a weekly basis but monthly on the 17th.
These reports indicate the number of new projects that appeared to construct new houses. The more projects there are, the healthier the economy should be at some point.
The reports are mathematically adjusted considering the seasons (obviously less houses are constructed during winter times).
On the other hand, if the interest rates are too high, the housing starts report should show a decrease of these projects in the economic calendar, possibly meaning a degrading economy ahead.
Federal Open Market Committee (FOMC) Meetings
Before diving into what this FOMC meetings are, I should first start by explaining what the Federal Reserve System (also known as FED) is.
The FED are the central bank of the United States, responsible for the monetary policy. As most currencies are related to the USD, their decisions usually have a worldwide impact.
The FOMC meetings have the main goal of deciding whether to increase or decrease the interest rates in which institutions can borrow from the FED.
They must be really cautious when deciding the rates because if they decide to increase them too much, then a recession can happen but if they keep it too low for a very long time, then the inflation can get worse, which is also bad for the economy.
While I think these are the 3 most important points to grasp from the economic calendar, your strategy and goals might suggest something different, and that's alright.
I'd like to hear some of your strategies and key things you usually take from this calendars, whether you're a trader or investor.
Also, keep in mind that most of economic calendars are free to use, here's one!