Economic indicators are scheduled pieces of economic data and metrics that help investors and analysts to interpret the current and possible future state of the underlying economy. By providing information about an underlying economy, fundamental indicators can also help investors to determine the fair value of relevant financial assets. There are three main types of economic indicators: leading, lagging and coincident indicators.
- Leading economic indicators, such as the level of manufacturing activity usually change before the economy changes (they ‘lead’);
- Lagging indicators, such as GDP, usually change after the economy has changed (they ‘lag’);
- Whereas coincident indicators, such as the unemployment rate, usually change around the same time that the economy changes.
There are numerous economic indicators scheduled for release on a daily, weekly, monthly, quarterly and annual basis. Economic indicators are some of the major catalysts of price movements in the financial markets. It is, therefore, important to track these events to be able to not only take advantage of arising opportunities but to also reduce risk exposure when volatility increases in the markets around such times. This is why the Economic Calendar is an important tool for every financial market trader. The tool is a detailed calendar that lists all important economic data releases and events that will have an impact on various assets as well as the underlying economy.
A detailed explanation on how the market will be impacted by the event is also highlighted, as is the previous, forecasted and actual data released. Most investors will usually trade the actual release in relation to the forecasted figure. If the actual release is better than expected, there will be demand for the underlying asset; whereas an actual release that misses the expectations will boost supply. The Economic Calendar lists numerous economic indicators daily. Nonetheless, here are some of the most impactful economic indicators in the global financial markets:
