USD/CHF hits session lows sub-0.8000 amid generalised Dollar weakness

• The US Dollar depreciates below 0.8000 and approaches last week's low at 0.8988.
• Dovish comments by Fed Powell boosted hopes of Fed cuts and are weighing on the USD.
• Deflationary pressures in Switzerland are keeping the Swiss Franc from appreciating further.

The US Dollar is trading lower across the board as investors increase bets on Fed cuts. This is pulling the USD/CHF pair below the 0.8000 psychological level during Wednesday's European session and approaching Friday's lows at 0.7990.

The Greenback is losing ground across the board on Wednesday, as investors shifted their focus from the escalating Sino-US trading tensions to the Federal Reserve's monetary policy, following dovish remarks by Fed Chair Jerome Powell on Tuesday.

Fed's Powell hints at further rate cuts

Powell emphasised the weak momentum of the labour market over the higher inflationary risks, practically confirming that the central bank will cut rates by 25 basis points in late October, and boosting hopes of another such cut in December.

Furthermore, the Fed chief affirmed that the bank is nearing the end of its balance sheet drawdown, the so-called "quantitative easing" programme, as, he assessed, some signs that liquidity conditions are gradually tightening have started to emerge.

In Switzerland, deflationary price data keeps fuelling expectations that the SNB might be forced to introduce negative rates again, which is keeping Swiss Franc upside attempts limited.

On Tuesday, the Swiss Producer Prices Index showed that inflation at factory gates contracted for the fifth consecutive month in September, dropping by 0.2% after a 0.6% decline in August and against market expectations of a 0.2% increase.