Salient to Investors:

A deepening credit crunch for European companies adds to the risk of another recession. Small and medium-sized companies that generate as much as 70 percent of the economy are starved of credit.

The median of 48 analyst estimates is for a drop of 2.3 percent against the dollar by next September.

Athanasios Vamvakidis at Bank of America Merrill Lynch said Draghi’s actions have reduced sovereign risk but not enough to improve credit conditions in the periphery – private-sector credit growth continues to be negative and lending rates remain a problem. Vamvakidis sees the euro declining to $1.23 by year-end and to $1.20 in Q3 2013 because the ECB will have to do more to tackle the squeeze on lending.

Hans Redeker at Morgan Stanley said betting against the euro would be a mistake because the ECB’s bond-purchase program will boost demand for European debt and buoy other assets – sees $1.35 this year. Redeker said markets will rally accompanied by a stronger euro, while Spain will request aid and trigger ECB purchases sooner or later.

Th e IMF said European banks may have to sell as much as $4.5 trillion in assets through the end of 2013, which may limit lending and curb growth in Greece, Italy, Ireland, Portugal and Spain by as much as 4 percent, and reduce the supply of credit in Europe’s weaker economies by 9 percent through the end of 2013.

Robert Savage at FX Concepts said corporates in Europe cannot gain access to fair market loans, which is the core of growth, and sees $1.25 by year-end and $1.15 by the end of 2013.

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