After the FOMC bought forward their rate hike plans, there is now a growing belief that the RBA might do the same.

After the economic recovery continues to gain momentum, the talk in the past few days has been the RBA could well bring forward their rate hikes to 2022.

One of the major banks has outlined that very case and the evidence would suggest that is a likely scenario now”

“Commonwealth Bank of Australia (CBA) economists expect interest rates will rise from November 2022, well ahead of the 2024 timeline currently forecast by the Reserve Bank of Australia (RBA).

The Banks economists believe strong labour market conditions and wage growth mean the RBA will need to begin normalising monetary policy in late 2022 with a cash rate increase to 0.5 per cent, peaking at 1.25 per cent by Q3 2023.”

The AUD/USD has fallen away sharply in the back half of June and much of that move is on the back of a stronger USD. Given that the US is also prepared to open up the economy in many states and stop with lockdowns, on the surface, the USD should outperform.

However, the RBA is meeting this time next week and that could certainly be the trigger for rate revision.

Looking at the charts and we can see that two round number levels of 0.7500 and 0.7600 appear to be the most obvious support and resistance.

Similar to how price was trading last time around in the earlier range, I think we should be watching these two levels closely and a break in either direction could well be a nice momentum play.

If the belief grows that rates will rise early, then I suspect we could see some more upward pressure in the rest of the week. But of course, with the US jobs number on Friday, anything can happen.