How to Read an Economic Calendar: Market-Moving Data

Understanding impact levels

Most economic calendars classify data into low/medium/high impact (usually with yellow/orange/red color codes). High-impact data includes central bank interest rate decisions, inflation reports (CPI), and US non-farm payrolls (NFP) data — these usually cause sudden and sharp price movements the moment they are released.

Most followed data

The following data points are the most decisive for most currency pairs:

• –Interest rate decisions — whether central banks raise policy interest rates directly affects the currency's appeal.
• –Inflation data (CPI/PCE) — is one of the strongest signals regarding the central bank's future interest rate decisions.
• –Employment reports — particularly NFP in the US, are considered a strong indicator of the overall health of the economy.
• –GDP growth figures — show the general direction of the economy and are usually the reason behind slower but sustainable trends.
• –Speeches by central bank governors — signals given regarding future policy move the market just as much as the numbers themselves.

Things to consider around high-impact data

• –Spreads can widen immediately before and after data releases — opening positions during this period can be extra costly.
• –The sharp movement in the first few minutes usually reflects the market's initial reaction rather than the true direction; waiting for it to settle can be healthier.
• –Reducing position size or reviewing stop-loss orders prior to high-impact data is a reasonable precaution against unexpected volatility.