06:02 AM EDT, 10/17/2024 (MT Newswires) -- Financial markets are pricing a 25bps European Central Bank rate cut on Thursday with a 97% probability, noted ING.

The bank doubts the ECB will disappoint, but it sees upside risks to the short end of the euro rates curve on Thursday.

This is because markets now virtually price a 25bps rate cut at each of the next six meetings and ING doesn't believe the ECB is ready to capitulate and support faster easing -- some 50bps cuts -- towards the neutral rate near 2.00%/2.25% for the deposit rate.

If the bank is right, EUR/USD could be due to a corrective bounce to the 1.0900/0920 area, although such gains may prove temporary.

Perhaps a cleaner story for euro strength Thursday will be EUR/CHF. Here ING feels EUR/CHF has very much been dragged around by short-dated EUR rates this year and the view that the Swiss central bank has a floor for the policy rate at 0.50%.

Higher short-dated EUR rates Thursday could drag EUR/CHF possibly up to the 0.9480/9500 area, according to the bank.

Later Thursday investors will see the Central Bank of Turkey (CBT) policy decision. In line with expectations, ING predicts the rate to remain unchanged at 50%.

September inflation numbers surprised to the upside and the market is expecting an additional dose of hawkishness. Market expectations of a first cut are shifting from October/November to December/January, which is showing up in the forward pricing.

However, the spot lira (TRY) market remains on the same trajectory, which is the main reason the bank prefers spot over forwards at the moment, collecting high carry.

As a consequence, reassurance from the CBT should only extend the window where TRY remains the currency of choice for markets, while TURKGBs rather remain on the sidelines, waiting for the first CBT rate cut, added ING.