UBS AG Chairman Axel Weber said he expects the euro and yen to weaken against the dollar because the world’s three major central banks are on different paths.
The Bank of Japan, the European Central Bank, and the U.S. Federal Reserve have entered a “new phase,” Weber, a former president of Germany’s Bundesbank, said in an interview with Bloomberg Television today.
The Fed has started to allow interest rates to rise by reducing its bond purchases and will continue to do so, said Weber, 57. The ECB is the only one of the three withdrawing liquidity from the market at the moment, Weber said. These policies have kept the euro high against the dollar, he said.
Weber said the U.S. will probably raise interest rates some time next year. UBS, Switzerland’s biggest bank, expects the euro to weaken against the dollar “in the long term,” according to Weber. The bank expects the yen to fall “strongly” against the dollar, Weber said.
The euro reached the highest level against the dollar since Oct. 28, 2011 on March 7, and recently traded at $1.3874.
UBS is among the top four currency-trading banks, according to a May survey by Euromoney.