USD/CHF trades cautiously near 0.8000 as Fed dovish speculation intensifies

• USD/CHF struggles to hold its key support level of 0.8000 on accelerating Fed dovish bets.
• The SNB is unlikely to shift to negative interest rates.
• The US-Swiss trade deal could be announced in two weeks, Bloomberg reported.

The USD/CHF pair trades with caution around 0.8000 during the late Asian trading session on Wednesday. The Swiss Franc pair faces selling pressure as the US Dollar (USD) falls on the back foot amid growing expectations that the Federal Reserve (Fed) could cut interest rates again this year.

During the press time, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, edges higher to near 99.55. Still, the USD Index is close to its weekly low of 99.30 posted on Tuesday.

The US Dollar declined on Tuesday after the release of the ADP Employment Change four-week average data, which prompted Fed dovish expectations. Private payroll processor ADP reported that employers laid off 11.25K workers each week through late October. Weakening US job trend has raised concerns over the current status of the labour market.

According to the CME FedWatch tool, the probability of the Fed to cut interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has increased to 68% from 62.4% seen on Monday.

Meanwhile, the Swiss Franc (CHF) trades firmly amid receding expectations that the Swiss National Bank (SNB) could shift to negative interest rates. SNB officials have lately expressed confidence that inflation could accelerate in coming quarters.

On the global front, the United States (US) and Switzerland are close to signing a trade deal in two weeks. A Bloomberg's report showed this week that the US and the Swiss economy could announce a trade deal in two weeks, in which Washington is expected to reduce tariffs on imports from Switzerland to 15%.