How interest rates move currenciesA central bank raises rates and the currency falls. This happens constantly, it is not a malfunction, and the reason is the single most useful thing to understand about macro trading.How to use an economic calendar
It will not tell you which way to trade. What it tells you is when the market is about to become a different market, which is more useful and much less often acted on.
An economic calendar lists scheduled releases: inflation, employment, growth, central bank decisions, survey data. For each one it gives the time, the country, the previous result, the consensus forecast and, once published, the actual figure.
Most traders use it as a source of trade ideas. It is far better as a risk tool, and the difference between those two uses is most of what this article is about.
The three numbers, and which one matters
Every row has a previous, a forecast and an actual. Reading only the actual is reading a third of the information.
| Field | What it is for |
|---|---|
| Previous | Last period's result. Sets the direction of travel, and can be revised, which changes the story retroactively. |
| Forecast | The consensus expectation. This is what is already in the price. |
| Actual | The new figure. On its own it means nothing. |
| Actual minus forecast | The surprise. This is what the market trades. |
Two releases can print an identical actual and produce opposite reactions, because one beat the forecast and the other missed it.
Why the same number is two different events
Employment data, two months running. The published figure is identical both times.
205,000 jobs, twice
- Month one forecast200,000
- Month one actual205,000 − 200,000+5,000 surprise
- Month two forecast100,000
- Month two actual205,000 − 100,000+105,000 surprise
Same result, twenty times the surprise205,000The first is a non-event. The second forces a wholesale reassessment of the labour market and the rate path. The figure never changed.
A workable routine
Ten minutes at the start of a session, then two decisions. This is the whole method.
Set the time zone once, properly
Then check it again after any daylight-saving changeover. Countries switch on different dates, so the relative timing between London, New York and Sydney shifts twice a year. A memorised local release time is wrong for several weeks each year.
Filter to the currencies you actually hold
If you trade EUR/USD, GBP/USD and USD/JPY, that is four economies, not three, and every one of your positions is exposed to the US releases. Filtering removes noise and reveals overlap.
Mark the high-impact releases
Central bank decisions, inflation, employment. The importance rating is an estimate rather than a promise: a low-rated release can move markets when it speaks to whatever the market is currently worried about.
Check what is already open
Not what you might trade, but what you are holding right now. This is the step that turns the calendar from an idea generator into a risk tool.
Decide before, not during
Reduce the position, close it, or accept the event risk deliberately. Any of the three is defensible. Making the choice at the moment the number lands is not a choice, it is a reaction.
Read the whole release afterwards
Headline, core, revisions, and the components underneath. Then look at what bond yields did, which is the cleanest read on how the market interpreted the policy implication.
Why the first move so often reverses
A release lands. The currency jumps. Ninety seconds later it is back where it started and heading the other way.
This is normal. The initial move is the headline being processed. What follows is the rest of the release being read: the core figure that contradicts the headline, the downward revision to last month, the component that shows the strength was concentrated in one sector.
A central bank decision has an extra stage on top of this. The rate is announced, then the statement is read, then the press conference begins and a single sentence about future policy reprices everything again. Three separate repricings inside an hour, and the first one is often the least informative.
An empty calendar does not mean a quiet market.
What your broker gives you
Every broker in our records offers research of some kind, though the depth varies enormously and the label covers very different things.
- 100of 100 offer research or analysisIt is table stakes rather than a differentiator.
- 0.2 → 1.5typical spread widening on major newsIn pips on EUR/USD. A minimum advertised spread is a fair-weather figure.
- 82msmedian execution speed in our recordsFast on an ordinary morning. During a release, prices can move meaningfully inside it.
Third-party tools such as Trading Central and Autochartist appear repeatedly across our records. What matters is whether the calendar you use handles time zones correctly, not whose logo is on it.
Before a high-impact release
If you cannot answer the last one, the position is too big.
- Is my calendar in the correct time zone, allowing for daylight saving?
- Which of my open positions is exposed to this release?
- Do several of them share the same currency on the same side?
- What is the forecast, and has the market been trending into it?
- Have I already decided whether to hold, reduce or close?
- If the spread triples and my stop slips twenty pips, is the loss still one I planned for?
Common questions
What does previous mean on an economic calendar?
The result for the preceding period. It can be revised later, which sometimes changes the interpretation of the current release.
Which matters more, actual or forecast?
The relationship between them. The surprise is what the market trades, not the level.
Does good economic data always strengthen a currency?
No. It may have been expected, another component may have been weak, a previous figure may have been revised down, or the implication for policy may not be what the headline suggests.
Do revisions matter?
Considerably. A strong print alongside a large downward revision to the previous month can be read as net weakness, and markets frequently trade it that way.
Does a high-impact rating guarantee volatility?
No. If the result matches expectations and the guidance is unchanged, a major release can pass with barely a flicker.
Can low-impact data move markets?
Yes, when it speaks to the market's current preoccupation. Ratings are estimates of typical importance, not of this particular week's.
Should I remove my stop before news?
Removing a stop does not remove event risk. It removes your control over it. If the position is too large to hold through a release, the answer is a smaller position, not a missing stop.
Can I place orders either side of a release to catch the breakout?
You can, and people do. Both orders can trigger, both can slip, and the move can reverse straight through your entry. It is a strategy with well-known failure modes rather than a free option.
Is the calendar useful if I only trade technically?
Yes. It tells you when spreads widen, liquidity thins and slippage rises. You do not have to forecast the number to benefit from knowing when it lands.
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Other relevant articles
How interest rates move currenciesA central bank raises rates and the currency falls. This happens constantly, it is not a malfunction, and the reason is the single most useful thing to understand about macro trading.
How inflation moves marketsInflation fell and the market sold off. Inflation rose and shares rallied. Both happen regularly, and neither is irrational once you know what the number is being measured against.
What volatility does to your position sizeThe same one lot can risk $200 in a quiet week and $800 in a busy one. Nothing about the trade changed. The market did, and the position did not follow.