An economic calendar is a fundamental analysis tool that is used by traders. Brokers from all disciplines from forex to binary options use it to learn about planned economic significant events, to learn about the market’s anticipation, and to get the bottom line results of all these events in a centralized place. An economic calendar for binary options puts emphasis on relevant events that may influence trading.
The events that can be included in economic calendar for binary options:
Speeches that are mentioned in a calendar include significant speeches that may release formal announcements or provide information on economic matters. Federal Reserve officials often speak in conferences providing perspective and their view on current matters, and these speeches include periodic speeches by Federal Reserve chairmen. In the U.S. the Fed Chairman has quarterly briefings following the FOMC quarterly projections. These speeches are usually scheduled at 02:15 PM EDT. The FOMC release usually moves the market according to the published data and projection and the chairman’s briefing moves the market if significant projections are elaborated or if an emphasis is put on a specific subject. The quarterly summary and projections usually attract the financial reporters who report live from the event and publish data and quotes from the FOMC officials.
Federal bank / Central bank announcements
The announcements are usually given after every meeting of the monetary committee. The frequency of these meetings is usually at least once a month to review the data and decide on policy and actions to implement the determined policy. The Federal Reserve can change interest rates, change taxation on various industries / products, recommend government interference and more.
Examples to events included in economic calendar can be the famous FOMC meeting (Federal Open Market Committee), Chinese Central Bank, European Central Bank, Reserve Bank of India etc.
The FOMC is gathered every 6 weeks to review the macroeconomics data and decide on the various measures to take in order to influence and align the data with the desired goals. The committee changes interest rates, issues bonds, buy bonds, and other tools they use to improve the economy. The indirect tools sometimes create an improvement of one factor but damage another one and in these cases the FOMC can directly control specific industries like the taxation or mortgages cost. Markets tend to anticipate the Central banks’ statements and incorporate the expected result in the market prices even weeks ahead. When there is a dramatic announcement or a result which is different from the expected result, we see drastic markets movement that can last for days.
The macroeconomics data is published to describe the state of a certain aspect in local economies. These reports are released not only by the treasury department, the federal bank, or the monetary committee but also reports by the Labor Department and other governmental entities. The majority of the events in the economic calendar for binary options are from this type of events. Many of the events included in this category occur on a weekly basis.
Employment situation is a summary published by the Bureau of Labor statistics and incorporates data about employment unemployment and specific data on different sectors. The information includes gender specific statistics, industry specific statistics, and age statistics. The report includes employment, unemployment, the labor force size and other related data. The significance of this report is that it indicates the health of the economy and the direction it is headed. The change in rates and the number of long term unemployed (27 weeks or more) and the additional data shows when more jobs are created, more people are employed and even the growing sectors in term of employment which is fueled by financial activity. Other uses of this report are when employment growth is negative, there is an increased chance that interest rates are lowered and stock exchange experiences a positive boost.
CPI (Consumer Price Index) is an index that measures the cost of a fixed “basket” of consumer products and services purchased by households. The market basket includes food and beverages products, housing (including fuel and furniture), apparel, transportation (new vehicles, gasoline, insurance, airline fairs), medical care, recreation, education and communication, other goods and services. The CPI is used to monitor inflation as when prices go up more than the household income inflation occurs.
New Jobless Claims is an indicator published by the Bureau of Labor statistics on a weekly basis. This report specifies the number of new applications to the unemployment insurance for the first time. This indicator adds to the measuring of the employment market’s health as the fewer new applicants recorded directly shows the stronger state of the employment market. Traders can use this indicator in addition to other employment data to measure the momentum of the economy and does the economy expands or shrinks.
Existing Home Sales is a report that publishes the total number of sales of “consumer level” real estate closed deals for homes. The purchasing of a new home can provide an indication on the debt cost as people usually need mortgages to fund their house-buying; it shows the activity in the housing market, an indication to inflation and much more. This is a more complex indicator to act upon as it requires other inputs in order to determine the root cause of the change and therefore is less straightforward and is not usually used by new traders.
Housing starts is a report that publishes the number of new houses that are being built. This data just like the Existing Home Sales is influenced by many factors and projects on many aspects of the economy’s health. Stagnated markets, expensive markets, and falling markets can all cause a drop in the result of this report and it is essential to know the other factors in order to better understand the impact the report has on the markets.
Personal Income and Outlays report is an indicator to the financial balance in households. The income represents the total money received from the various sources like salaries. The outlays represent the personal consumption and the interest payments. This indicator is actually a financial health indicator of the consumers sector. Usually there is a correlation between the income and expenses as the consumption and savings grow when the income increases.
GDP (Gross Domestic Product) is an indicator that represents the market value of goods and services produced in a country in a specific period of time. This indicator is considered to be an indicator with the widest angle on a country’s economy because it incorporates the real production value of a country. The GDP is the sum of the government spending, the exports minus the imports, the private consumption and the gross investment. Another detail that can be calculated is the GDP per capita which is widely recognized as the measure of standard of living in a certain country. It doesn’t mean that high GDP per capita equals high income but that the money produced in the market per capita is higher and therefore more money available in products, services, government spending etc.
PMI (Purchasing Managers Index) is an index that is based on a survey of industry purchasing managers from the private sector. The survey includes questions that deal with the new orders, inventory levels, supplier deliveries, production scale, and the employment environment. The answers are gathered and the index is calculated. A positive answer is calculated as 1, no change is 0.5, a negative answer is calculated as 0. Because the survey takes 100 managers, the index has a maximum value of 100 and every value over 50 is considered a positive one.
PPI (Producer Price Index) is the producers’ equivalent to the CPI. This indicator measures the average price change for the output produced by domestic producers. The PPI is used by analysts to evaluate the efficiency in the market and the balance between local consumption and local production.
The Industrial Production Index represents the production output of the manufacturing, mining, and utilities of a country. The index is based on annual growth estimates compared to a previous set reference which is represented as 100. The significance of this indicator is the weigh the industry growth has and the role it plays in pushing the economy forward.
Durable Goods Orders is released by the Bureau of Census and indicates the existing orders in the pipeline from factories for durable goods. The significance of this indicator is to predict the capacity of production needed to fulfill current orders and the expected value generated from the production and delivery of the hard goods.
You can use our daily economic calendar for binary options updates to learn about the upcoming financial news and economic events. In order to view the results of these events, you can ask your broker for the data or use a live streaming economic calendar from leading providers like Bloomberg and the Wall Street Journal.