XM’s Economic Calendar for all traders
XM, an online Forex and CFD provides its traders the real-time updated “Economic Calendar”.
XM’s Economic Calendar can be used to follow the medium-term and long-term market trends, by following the important news, events and announcements.
By referring to XM’s Economic Calendar, you can stay updated of the upcoming economic news and events.
XM’s Economic Calendar shows the name of the event, the most related currency, importance of the event, date and time, previous numbers (if available) and the prediction.
Go to XM Official Website and start following the major market events with XM.
XM’s Economic Calendar is a crucial part to perform Fundamental Analysis, and without it, it would be very difficult to follow the long term trend of the markets.
Is your main trading strategy “Swing Trade”, “Position Trade” or “Earning Swap Points”?
Then XM’s Economic Calendar will let you analyze the fundamentals of the market, and grasp the market trend.
What is FX Fundamentals Analysis?
“Fundamentals analysis” in FX is a method of analyzing the movement of the exchange rate based on the basic conditions (fundamentals) that represent the economic conditions of each country, such as policy interest rates, balance of payments and employment statistics.
Fundamentals analysis is useful for medium- to long-term investments such as swing trades and swap trades, as a healthy national currency is likely to have higher value in the future.
On the other hand, fundamentals analysis is not very suitable for short-term trading such as day trading and scalping.
Forex markets are often driven by individual investors’ predictions and speculations, and whether good or bad economic indicator news does not always appear as a rise or fall in the market price.
There is a quote saying “Buy the rumor, sell the fact”, and the market price moves according to forecasts and expectations in advance, and at the time of the announcement, it is already shown as a trading result in the chart. It has already been done).
If the good news is still within expectations, it is determined that the value of the currency in the market will not rise further and the market may fall.
Therefore, it is common in FX trading to use not only fundamentals analysis but also both “technical analysis” that reads the future from the chart.
XM’s professional team provides both Fundamental Analysis and Technical Analysis every day for its traders.
Important indicators in FX fundamentals analysis
The basic economic conditions that influence the foreign exchange market are as follows.
- Policy interest rate
- Employment statistics
- GDP bulletin
- Consumer Price Index (CPI)
- Retail sales
- Balance of payments
- Geopolitical risk
- Remarks by important figures
Among them, the “policy interest rate” has a large direct impact on the exchange market.
The central banks of each country make monetary policy decisions about 4 to 11 times a year to make decisions, and the market price may change significantly after the announcement.
This is because in FX, there is a swap trade method in which currencies of countries with low interest rates are sold and currencies of countries with high interest rates are bought, and interest rate differences (swap points) of both parties are obtained.
The higher the interest rate of a currency, the more attention it receives.
The Consumer Price Index, which indicates rising and falling prices, influences the determination of the policy interest rate.
When there is inflation, the policy interest rate is raised (rate increase) to tighten the economy, and when there is deflation, interest rates are lowered to encourage consumption.
In addition, the exchange rate may move significantly when the monthly employment statistics of the United States and retail sales are announced.
Employment statistics are determined by the Fed (the central bank of the United States) in reference to the number of employees in the non-agricultural sector (statistics based on reported data of non-agricultural establishments) and the unemployment rate in order to make monetary policy decisions.
In the United States, where personal consumption accounts for about 70% of GDP, retail sales, which represents the state of domestic personal consumption, are also important indicators of economic conditions.
In addition, the international balance of payments, which represents the balance of economic transactions between nations, geopolitical risks to the economy caused by political and military tensions in specific regions, and political and economic key figures also affect the exchange market. May affect.
As an information source for confirming the announcement schedule and bulletins of such economic indicators, and the importance in the FX market, you can use the “economic indicator calendar” provided by XM, foreign exchange forecasts/reports by bank dealers and Forex.
How to utilize fundamentals analysis?
To analyze the market with XM, you can also use a demo trading account with virtual money.
XM’s demo account is free to open, and allow you to practice trading with the almost real trading conditions.
You haven’t signed up for XM yet? Register from here to start using XM’s economic calendar and see the market price charts in real time.
1. Useful for swing trade and swap trade
Fundamental analysis is useful for medium- to long-term investments such as swing trading and swap trading.
In particular, swap trading is a method of holding a long-term position and receiving the amount equivalent to the interest rate difference between currencies (swap points), so it is necessary to check the policy interest rate and political/economic stability of each currency.
Swing trading is a method of holding a position for a few days to a few weeks and aiming for exchange gains due to trends.
Trends often occur before or after the announcement of important economic indicators, so traders will trade on that wave.
However, since the rate often fluctuates immediately after the announcement, it is risky to continue holding positions after the announcement, so you should be careful.
For your information, XM is often running online and local seminars explaining the “Swing Trade” strategy.
2. Prepare for sudden price movements
When an important economic indicator is released, whether it is within or outside the forecast of the Forex market, the market can be volatile.
It’s a good idea to check the schedule for the release of economic indicators related to the currencies you are trading in advance and settle your existing positions before the market gets rough to prepare for sudden price movements.
Examples of the announcement of important economic indicators that have experienced significant price movements in the past include the Swiss Franc Shock announced by the central bank of Switzerland on January 15, 2015, and the EU shock in June 2016.
One example is the turmoil in the pound market due to the fact that the secessionists won the referendum over Brexit.
These may be due to sudden or betraying the expectations of most market participants, but even with the announcement of important economic indicators that have been planned from the beginning, the market may move significantly depending on the degree of deviation from the expectations.
So it may be necessary to prepare in advance.
3 Points about fundamentals analysis
1. Fundamentals analysis is already included in the chart
There is the idea that “all economic indicators are reflected in the chart.”
This is based on one of the theories, “The average weaves in all phenomena,” which was proposed by Charles Dow, a 19th-century American securities analyst.
What it means is that various economic indicators and even sudden incidents and disasters are reflected in the chart by investors, and price movements cannot often be explained by the quality of individual incidents and indicators.
For example, after the market attracts attention and the expected good news (good material) is exhausted, the market may soar or plummet due to “material exhaustion”.
Also, since institutional investors often get information more widely and quickly than individual investors, by the time the individual investors get the news, they may have already begun to trade by anticipating market reactions.
Therefore, it is better to use not only the fundamentals analysis as it is for market forecasts, but also the market reaction that appears as a chart for forecasting.
2. Extra expectations come in when reading the chart
When doing technical analysis using charts, and when looking at the timing of settlement while holding a position, information about fundamentals can make a slow decision.
Even at the timing when it is better to cut off the loss in view of price movements, the judgment is delayed because the expectation is that “there is good news and it is predicted that the market price may rise from now on”.
There is a possibility that the unrealized loss will increase, and finally a forced stop out will occur.
While putting fundamentals analysis in one corner of the head, it is necessary to use technical analysis when making decisions.
3. Fundamentals analysis isn’t perfect
While a fundamentals analysis is useful for a long-term currency outlook, it can be unsuitable for determining what to do with current price movements.
In order to read whether the price is rising or falling (trend market), is not moving within a certain range (range market), or how it is likely to move in future, technical analysis using moving averages etc. is required.