It's a huge week for ASX investors this week, according to eToro market analyst Josh Gilbert.
Here are the three events that he considers the most critical to monitor:
1. Australian monthly inflation update
Rampant inflation is what's been driving the Reserve Bank of Australia to raise interest rates 12 times over the last 13 months.
So the general public, not just investors, will be watching with bated breath as the latest consumer price index figures are released Wednesday.
Gilbert noted how last month inflation nudged up to 6.8% due to increasing rent and fuel prices, forcing RBA governor Phillip Lowe's hand.
"Lowe has made it clear that the RBA will do what is necessary to bring inflation under control, which has put the S&P/ASX 200 Index (ASX: XJO) under pressure so far this year due to markets pricing in further hikes from the central bank."
Market consensus is that the central bank will push up its cash rate from the current 4.1% to 4.6% over the coming months.
But Wednesday's update could rescue us all from that fate, according to Gilbert, if it shows "a sharp decline in inflation".
"Recent RBA minutes point towards 'upside' risks to inflation, and there are fears over services inflation, with rising electricity costs and soaring rents set to keep feeding inflation," he said.
"The good news is that inflation is expected to decline to 6.2% for May, but a number below 6% would likely be needed to divert the RBA from raising rates at the start of July."
2. Australian retail sales update
The Australian Bureau of Statistics will reveal the latest retail sales data one day after the inflation figures.
This is another important wind gauge for the RBA.
"Last month's data showed that the RBA's extensive tightening cycle is having its desired effect on consumers, with sales flat for April," said Gilbert.
"This is a situation where bad news is good news for the RBA. Retail sales were flat, but this means that consumption is slowing, a key ingredient in the fight against inflation."
He added that retailers were now "feeling the full pain" of the recent run of interest rate rises as consumers locked their wallets.
The situation means that discounting is starting to be seen as the end of financial year approaches, with retailers keen to move stock.
"The idea of driving volume through markdowns can be useful but unfortunately, it means profit margins erode as a result," said Gilbert.
"We're already seeing that take shape, with many retailers downgrading their profit guidance with the full extent of the difficulties likely to be evident during reporting season."
The expectation for Thursday is that retail sales would "gain marginally" in May to 0.1%.
"But the next six months may see this number decline further as rates continue to rise and the lag of previous hikes takes full effect."
3. Can Bitcoin hit a new 52-week high?
Last week the most prominent cryptocurrency scored a huge boost as BlackRock Inc (NYSE: BLK) submitted an application to regulators to create a Bitcoin (CRYPTO: NTC) exchange-traded fund.
"Bitcoin jumped by about US$30,000 for the first time in months," said Gilbert.
"But the key level to watch now is a move above US$30,000. The asset hasn't traded above this level for a year."
He added trading volumes had already risen, and a new 52-week high could "spur investor optimism".
"The bottom line here is that this is a tip of the hat from Wall Street to crypto, signalling institutions are clearly keen on this asset, even if it felt crypto had left the conversation for a few months."
Gilbert pointed out BlackRock historically had an excellent success rate in having their ETF applications through regulators, with 575 approvals versus one rejection.
"A potential ETF approval, alongside clearer regulation and a bitcoin halving next year, are crucial catalysts for a solid second half of 2023 for Bitcoin," he said.
"However, there are still risks, from regulatory crackdowns to the potential for higher-for-longer interest rates that may spoil the party."
