USD/CHF trades with negative bias below 0.8000; focus remains on US CPI report

• USD/CHF ticks lower during the Asian session, though it lacks any strong follow-through selling.
• A positive risk tone and SNB Chief Schlegel's remarks undermine the CHF and support the major.
• The US CPI report will drive the USD later this Thursday and provide a fresh impetus to the pair.

The USD/CHF pair struggles to capitalize on its gains registered over the past two days and trades with a mild negative bias, below the 0.8000 psychological mark during the Asian session on Thursday. The downside, however, remains cushioned as traders opt to wait for the latest US consumer inflation figures.

The crucial US Consumer Price Index (CPI) is due for release later during the North American session and will play a key role in influencing market expectations about the possibility of a jumbo interest rate cut by the Federal Reserve (Fed) next week. This, in turn, will drive the US Dollar (USD) demand in the near-term and provide some meaningful impetus to the USD/CHF pair.

Heading into the key data risk, traders have been pricing in the possibility of a more aggressive policy easing by the US central bank and have almost fully priced in three rate cuts for the rest of the year. The bets were lifted by the cooler US Producer Price Index (PPI) released on Wednesday, which is seen weighing on the USD and acting as a headwind for the USD/CHF pair.

However, a generally positive risk tone, along with Swiss National Bank (SNB) Chairman Martin Schlegel's dovish remarks on Wednesday, could undermine the safe-haven Swiss Franc (CHF). In fact, Schlegel said that the central bank would not hesitate to cut rates again if conditions warrant, though the bar for returning to negative interest rates remains very high.

This, in turn, makes it prudent to wait for strong follow-through selling before confirming that the USD/CHF pair's recovery from the 0.7915 area, or the lowest level since July 23 touched earlier this week, has run out of steam. Bullish traders, on the other hand, need to wait for sustained strength and acceptance above the 0.8000 mark before positioning for further gains.