Table of Content
Table of Content
What Do the Colours on Forex Factory Calendar Actually Mean?
The colours used in the Forex Factory calendar represent different degrees of market impact for specific events, as indicated by their colour-coding system. Here’s an outline:
Red events typically represent high-impact, market-moving events. Traders pay particular attention to events with red hues as they present trading opportunities or necessitate adjustments in existing positions to manage risk effectively. Below are three top-line red events:
Red Events with High-Impact Potential
Non-Farm Payrolls (NFP) in the US
Each month’s release provides crucial employment data on new job creation, unemployment rate, wage growth and more – allowing traders to assess its impact on both US dollars and global financial markets.
Central Bank Interest Rate Decisions
Decisions by major central banks such as the Federal Reserve (Fed), European Central Bank (ECB), or Bank of England (BoE) on monetary policy have a direct effect on interest rates, currency values, and market sentiment – making their announcements considered high-impact events.
Gross Domestic Product (GDP) Reports
GDP reports provide insight into the economic development of countries or regions, with quarterly GDP figures often being high-impact events that reflect overall health and performance in addition to currency valuations.
Whilst not as influential as red events, orange events still have a significant market impact. Such releases often include economic indicators which provide insight into the state of the economy while their currency value influence may be limited compared to high-impact events. Traders frequently track these events for updates on relevant developments and potential market reactions; below are three top orange events:
Orange Events with Medium-Impact Potential
Consumer Price Index (CPI) Data Released
CPI serves as a key gauge of inflation, so its release can have profound ramifications for currency prices and interest rate expectations. It shows how the prices of goods and services change over time.
Reports on Purchasing Managers’ Index (PMI) Surveys
PMI surveys provide valuable insights into economic activity and business conditions within specific sectors or countries. Purchasing Managers’ Index (PMI) releases, such as Manufacturing PMI or Services PMI releases, can serve as medium-impact events as they show whether an economy or sector is growing or contracting.
Speeches by Central Bank Officials
Speeches or public appearances by central bank officials, including their heads, can provide invaluable insight into future monetary policy decisions or changes to the economic outlook. Such speeches are closely watched by traders because of their potential to affect market sentiment and currency values.
Its Events marked in yellow typically have low impact, typically having minimal or no lasting market ramifications and no significant volatility. They include lesser-known economic indicators or speeches by less influential figures that do not generate substantial market volatility; traders who prioritize longer-term trading strategies may give less consideration or attention to these events as they may not significantly affect trading decisions. Below are three such yellow events:
Yellow Events (Low Impact):
Retail Sales Reports
Retail sales data measure total retail establishment sales. While these reports can provide valuable insight into consumer spending patterns, they tend to have low-impact events unless they significantly deviate from expectations in the market.
Housing Market Indicators
Housing market indicators such as starts, permits and existing home sales are low-impact events which provide information about the status of the housing market – they also indirectly affect economic growth and currency values.
Business Confidence Surveys
Such surveys as Germany’s IFO Business Climate Index or Japan’s Tankan Survey assess business sentiment and expectations. While such polls can offer insights into current economic conditions, they tend to be classified as low-impact events.
Grey-coloured events symbolize events that have already transpired and their impacts on the market are well known. Grey events provide traders with historical data points that they can use for further evaluation and analysis of current or past market situations.
The Forex Factory calendar features a colour-coding system to quickly assess the expected impact of upcoming events, helping traders quickly assess market volatility and relevance to trading strategies. By considering colour-coded impact levels, traders can better manage risk exposures, adjust positions as necessary and make informed trading decisions based on expected market reactions.