How Can Economic Calendars Improve Your Online Trading?

When you’ve done your homework and feel ready to go out and face the forex market, you must suit your strategy to the real conditions governing the environment. One of the most useful tools to help you do this is an economic calendar, which keeps you informed about the forex news events that are likely to influence market sentiment the most. The economic calendar is a standard component in any online trader’s kit, functioning like a map of the events that are due to spark market volatility down the line, thus allowing you to strategize ahead of time to minimize risk, but also to take advantage of nascent trends. 

While we never know exactly how traders will react to a given event, we do have some idea of what sort of volatility to anticipate in many situations, at least on a short-term horizon. This is why it can make a big difference to know when central bank announcements are scheduled, when GDP reports will be released, and when inflation figures will be printed. Economic calendars tell you all this and a lot more, offering you a broad blueprint of what lies ahead in the economic world. After perusing it, you can research further into the probable impacts of specific events, enhancing your sensitivity to the markets even more. 

Join us as we turn a new page in the economic calendar, peeking into the trends and forex events 2025 has lined up for us. You can track them by regularly consulting the various components of your economic calendar, for instance the economic indicators like unemployment or consumer spending reports, central bank meetings all over the world, and sentiment surveys that gauge the feelings of consumers on the economy. 

The Path of the US Federal Reserve

After three years of hawkish monetary policy, the Fed turned over a new leaf in September 2024. The domestic impact of the prolonged period of high interest rates was to cool the economy significantly, which was needed to reign in inflation. In addition to this, as Stanford University writes, “The American economy is not isolated, and if the Fed does not account for the risk of a global contraction, its actions may end up doing more harm than good”. One example of this is the fact that slowing economic conditions in the US tend to depress financial inflows into emerging market economies. 

The burning question, for many financial analysts, is: To what extent will the Fed’s dovish turn continue unabated as 2025 progresses? This will impact risk sentiment significantly and, with it, the outlook for stocks and other assets. Fed member Austan Goolsbee, in December 2024, was in favour of continued rate cutting going ahead, but not everyone felt the same way. The main reason was the danger of inflation heating up again. Due to this concern, Mary Daly of the San Francisco Fed suggested “a more thoughtful and cautious approach” in 2025. Along similar lines, Fed Governor Michelle Bowman said she “[sees] greater risks to the price-stability side of our mandate, especially when the labour market continues to be near full employment”.   

Looking at the global economy, economists said, near the end of 2024, that it fundamentally suffered from weak consumer sentiment. People were reluctant to go out and buy, despite improvements in inflation. This meant that a renewed bout of rising prices could further discourage spending, thus pushing the economy into recessionary territory. Monitoring this dynamic will be crucial for online traders as 2025 gets underway. 

European Central Bank (ECB) Policy

In the final months of 2024, the ECB believed “The disinflationary process is well on track”, with average inflation for 2025 predicted to be 2.1%. Their hawkish cycle appeared to have worked a bit too well, though, with prospects for an economic recovery looking worse than in September. Although there had been a growth surge in Q3 2024, this was partially due to the seasonal influence of tourism. As to Q4, the figures were looking dismal, with manufacturing in a downturn, services growth stunted, and exports weak. 

With this information in mind, the ECB cut interest rates on December 12, 2024, by 25 basis points. ECB president Christine Lagarde was hoping that lower interest rates would boost real (inflation-adjusted) incomes, which would improve consumption and, with it, the trajectory of the economy. None of this meant that inflation couldn’t rear its head again. One potential catalyst for higher prices was the ongoing conflict in the Middle East, which had the potential to hike oil prices and inflation significantly. In turn, this could necessitate a return to the hawkish ECB policy of old, which may bring on a recession. This is why it will be crucial to stay in touch with the development of ECB policy in the early months of 2025, which will be decided on a meeting-by-meeting basis. 

The Middle East Conflict

In the 1970s, when Arab countries cut oil production to punish countries that supported Israel, the result was years of inflation and slowed activity. The simmering tensions in the Middle East as 2025 approaches could potentially lead to something similar, which is why the economic world was watching developments in this region of the world very closely.  

Analysts gauge that a $10 surge in oil prices could heat up inflation by as much as 0.7% within a year. The likely reaction to such a scenario, on the part of central banks, would be to raise interest rates to get prices under control, and this would immediately hamper GDP growth. The global economic recovery that’s been in progress since the end of the pandemic could be endangered. 

European nations’ hopes for a return to consumer spending would be dashed if the conflict spirals out of control. This is because households cut back on purchases in times of geopolitical uncertainty. Businesses also hold back on plans for expansion at such times, and this affects employment and stock market sentiment. If oil production is curtailed by one of the combatants or their supporters, energy prices could skyrocket. Even in the absence of such a move, oil prices shot up by $10 a barrel in reaction to Israel’s attack on Lebanon in September 2024. And this was in the face of a pre-existing downtrend in the market, powered by weak demand from China and increased supplies coming out of North America. World leaders and central bankers will be keeping one eye firmly on the Middle East in 2025, which means you can track the situation through monitoring their comments and announcements. 

US National Debt

In the third week of November 2024, the US national debt reached the level of $36 trillion. One consequence of this huge number was that debt interest had become the second largest expenditure of the federal government. Newly elected President Trump will have to find ways of reigning in government spending and, more pressingly, will need to resolve the issue of the US debt limit in January 2025. “Doing so is essential to protecting our economic stability, safeguarding America’s global leadership, and securing future opportunities for every American”, in the words of the Bipartisan Policy Centre.  

Should the US default on its debt, the results would be “catastrophic”, according to Calvin Norris of Aegon Asset Management. Global confidence in the US Treasury market – one of the mainstays of the world’s biggest economy – could crumble. If it did, the perceived risk of holding US debt would surge, making it harder for the American government to continue borrowing. The privileged status of the USA and its currency in the world financial system could be challenged.  

According to White House estimates, a short default could deprive 500,000 Americans of their jobs and spark a mild recession. A more prolonged default could result in 8 million jobs being lost and a more severe downturn – in which the economy contracts by as much as 6%. Companies would go bankrupt, and the financial markets would feel the ripple effects for quite some time. Policymakers, businesses, and private citizens will be highly interested in this sticky issue throughout 2025. 

Summing Up

We have outlined four economic issues which appear to have taken central stage as we enter into a new year. For financial traders, it will be vital to track, not only the unfolding of the events themselves, but also their impacts on interest rates, monetary policy, and economic trends. The best way to monitor these things is by regularly opening up your economic calendar to see how central banks are responding, how consumers are reacting, and how companies are coping.  

It’s for this reason that online traders all over the world make sure to scan their economic calendars regularly. Doing this can give you an important edge over other market participants in sensitizing you to the forces that could trigger market volatility ahead of time, but also in helping you comprehend the broad forces shaping the economic climate.