Another action-packed week awaits ASX shares and their investors.
Let's break down the three most critical events to monitor, according to eToro market analyst Farhan Badami:
1. Australian consumer and business confidence
There is a double gauge of how Australians are feeling this week.
On Tuesday both the latest Westpac Banking Corp (ASX: WBC) consumer sentiment numbers and the National Australia Bank Ltd (ASX: NAB) business confidence report will be released.
"The pairing of both insights will give analysts a good indicator of the overall health of the economy," said Badami.
He noted that last month consumer sentiment dipped, and it would be a shock to see that reverse now.
"Businesses seem to be staying more optimistic than consumers, attributable to a general belief within the business community that the RBA is wrapping up its hike cycle.
"However, diminished discretionary spending has led to an underwhelming earnings season in the past few weeks… and we may see this reflected in a less enthusiastic response from businesses this month."
2. Australian unemployment rate
Jobless queues are a massive indicator of whether the economy is slowing down in response to the 12 interest rate hikes.
The latest figures on Thursday will make for fascinating reading.
"With July's rate just marginally higher than forecast, a steady or increased unemployment reading will likely push the RBA towards pausing rates again in October."
According to Badami, both the government and the central bank could still be hoping that unemployment could break the 4% barrier to assist with a "soft landing".
"July's reading was 3.7%, but economists are increasingly confident that keeping the number around the 3.75% region is sustainable, especially if inflation continues to slow – and ideally fall – without significant unemployment having to act as the catalyst."
Even though many businesses out there know that rate rises are coming to an end, if not already, it might be too late.
"The ripple effect of tightening household budgets and big businesses facing a holdover of inventory could lead to continuing redundancies among major workforces."
3. US inflation
What happens across the Pacific has a massive bearing on both the Australian economy and ASX shares.
So Wednesday's latest US consumer price index figures will be a "significant data dump", according to Badami.
"Many [are] hoping that inflation will continue to slow so that the [US Federal Reserve] may feel prompted to pull back on its hawkish stance."
When interpreting the numbers, it's important to remember the difference between the two main indicators.
"Headline inflation is typically a 'default' reading of the consumer price index, including household essentials.
"Meanwhile, core inflation subtracts food and energy prices – the belief being that this allows analysts to detect longer-term economic trends without the often influence of oft-volatile food and energy prices distorting key indicators."
