The economic calendar documents all the key pre-scheduled economic events from around the world. These outcomes are significant to investors, as they represent the macroeconomic health of different economies. Such developments have major impacts on markets and securities, which is why the calendar is closely followed by investors.
Some of these events are regarded by experts to be the most meaningful events of the year, but some of them are overlooked. Many domestic shareholders, particularly in the USA, believe that they should focus solely on domestic news, but this is never the case.
For example, when UK inflation falls, the Pound Sterling devalues, which impacts the trade with the USA. The same goes for China’s currency, which has a tremendous impact on the USA (and President Trump made sure it will be all over the news).
Here are the top 10 global events that should be observed closely by investors. These events signal more about the health of the economy than any other factors. We can use these events for short-term speculation, judgments about long-term value investing, or personal decisions like the right time to take a loan, own a home, or repatriating funds from abroad.
1. US Quarterly Accounts at Annualized Change in GDP
GDP is a core reflection on the economic prosperity of a country, and America’s reports can impact all international currencies, given the prestige of the dollar and the American economy. However, keep in mind that the US methods of calculating the figure differ from many European methods.
2. UK CPI
CPI stands for Consumer Price Index, and is the key measure of inflation in an economy. If high, shifts in consumer prices can present a large devaluing of a country’s currency. However, if it matches with the Bank of England’s 2% target rate, then CPI signals that the economy is growing at a healthy pace.
3. Interest Rate Changes
There is expected to be an interest rate announcement several times a month (regarding the influential economies). This is worth monitoring as an investor, as a reduction in interest rates may indicate an attempt to spur on struggling economy.
Additionally, an increase in interest rates generally leads to an attraction of foreign capital and thus a strengthening of the currency. We’ve previously seen the Fed cut rates in July and September of this year, with sentiment mixed on another rate cut before 2020.
4. Retail Sales
Retail sales are widely accepted to be a very strong indicator of consumer spending. Generally, a high report is prone to be bullish for that given country’s currency, whilst a low reading is forecasted to be the opposite. America’s retail sales is the most globally influential regarding currency.
5. Euro-Zone CPI Flash Inflation
The CPI inflation rate can be a great signal of how well Europe is performing compared to the rest of the world. Determining the prices in these economies as an aggregate sum will indicate how the Euro currency is faring. Factors such as if the Euro’s appreciation/depreciation rating determine how they can be ranked against other currencies. CPI is likewise a decent indicator of economic growth, too.
6. Employment Report
Reports on a country’s employment, payroll and unemployment statistics is a massively important development to observe as an investor. Other than being a barometer for the economy’s overall strength, it can suggest a widening disparity, which might influence consumption patterns that may affect certain markets or companies.
7. US ISM
ISM is a manufacturing index, and stands for Institute for Supply Management. The index (often referred to as PMI) tracks production levels on a month-to-month basis. The index is made up of several parts of equal weighting: employment, supplier deliveries, inventory, production and new orders, for example.
This report is one that investors eye closely near the beginning of each month. A high index usually means a bull market from the surge in company profits.
8. ISM Non-Manufacturing
Intuitively, this report is similar to the manufacturing ISM, only a different sector. The implications from the index being reported is just as influential. The US ISM non-manufacturing report can have ramifications on not only the USD, but all currencies.
9. Trade Balance
The balance of trade is an estimate of an economy’s net exports. Essentially, it is the country’s exports minus its imports. A trade deficit shows that the country is performing poorly related to other economies, as it is borrowing capital to pay for goods.
A positive report of trade balance may result from a stream in foreign direct investment, possibly because of a good interest rate or an undervalued currency.
10. 2019’s Big Question: UK-EU Withdrawal
Brexit is an extremely popular event that has captured public interest all over the world. Whilst there are countless outcomes with different policy implications, there is also a feeling of hedging and betting on the result, too. In this sense, the actual implications on currency and investment may be exaggerated compared to its direct and real policy implications.
These events taking place each year can say a lot about the health of the economy, especially when combined. Be sure to use these economic events to your advantage!