Forex Calendar: What it is and how to use it

Meaning of the economic calendar

Today Forex market is the world's leading financial market, which plays not the least role in the world economy. It has evolved since the fixed exchange rates of different currencies were abolished in 1974, as well as the reference to the gold standard. As a Forex market, Forex determines the parity of all currency pairs (or "crosses") in a floating exchange rate environment. Taking a position in Forex means selling one currency and buying another. For an investor, buying EUR/USD means buying euros and selling dollars.

Forex is a global market that operates in the Forex market continuously, 24 hours a day, using various strategies such as the strategy known as "arbitrage", which involves playing on price differences observed on the same support.

Most commonly traded currencies

The most frequently traded currencies in the world are the US dollar (USD: 43% of purchases and sales), the euro (EUR: 19%), the Japanese yen (JPY: 8.5%), the British pound (GBP: 7.5%), the Swiss franc (CHF: 3.5%), the Australian dollar (AUD) and the Canadian dollar (CAD).

Major players in the Forex market

Banks and financial institutions are the main players in the Forex market that shape the market dynamics. They execute 50% of transactions through "market maker" offers, offering at any given time a buy and sell price, the difference between which (the "spread") constitutes a financial profit. Large companies wishing to insure themselves against currency risk due to their international activities are also major players in the Forex market and also play a major role in shaping the market. Multinational corporations have also set up their own trading floors, conducting direct transactions on Forex for speculative purposes.

Central banks can also play a role by intervening in the market. They sell or buy currencies en masse to regulate the market and maintain their monetary policy. For example, the European Central Bank may sell euros in hopes of forcing the currency down. Institutional investors (hedge funds, etc.) transact both to hedge portfolios of stocks or bonds and for direct speculative purposes; they account for 30% of Forex transactions. Finally, private investors, whose investments have grown significantly thanks to online trading with Forex brokers, account for about 5% of Forex transactions.

The impact of the economy on the currency

Why do you need a Forex calendar

A Forex calendar allows you to anticipate all the important events and announcements affecting the Forex market. These are usually the publication of economic indicators, but political decisions and elections can also have a significant impact on the market. The Greek referendum on austerity measures in early July is a great example. In addition, statements by major institutions through their representatives are also events to be taken into account.

Among the figures, there are, above all, economic indicators, the publication of results either by companies or countries, for example through the trade balance. As for speeches, the speeches of the head of the Fed, for example, or the ECB in Europe are the most influential.

Forex calendar is a very important thing to pay due attention to in order to analyze and track important events that are already affecting or will affect the market in the future. As they say "forewarned is forearmed", so Forex calendar is your way to arm yourself with information that will help you to form a strategy for your further actions in Forex trading. By analyzing the calendar you will be able to look at events not just in a local sense, but to understand globally how the world economy is moving and what events in the world can affect the development or decline of the market.


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