The US dollar doesn't have 'too much to offer and anymore,' and looks set to plummet against other major currencies, UBS warns

• The dollar could plunge against the yuan, yen, and pound in the next few months, warns UBS.
• UBS Global Wealth Management's Hartmut Issel told CNBC Thursday in a phone interview: "Since the last month or two, the dollar does not have too much to offer anymore."
• Issel also thinks yield differentials will become more attractive of an investment than equities.
• Track the dollar versus the yen live Markets Insider.

The dollar could weaken against other currencies making credit spreads more attractive than equities during the coronavirus economic meltdown, according to UBS Global Wealth Management.

Hartmut Issel, head of Asia-Pacific equities, chief investment office at UBS Global Wealth Management, told CNBC on Thursday in a phone interview: "Since the last month or two, the dollar does not have too much to offer anymore. Across the board we should see strengthening of the yuan and the yen in the second half of the year at the expense of the dollar."

Issel added: "We think there will [first be a setback] in areas like investment grade in the US and in APAC (Asia-Pacific), emerging markets and high-yield bonds, but from a risk-reward point of view they will probably have more upside when things go well."

"We see upside for the Yen and also for the pound and to an extent we expect dollar weakness coming back. From a liquidity point of view we think people will look more towards the fundamental point of view at at yield differentials."

The US dollar fell to a one-year low against the yen of 103.76 in mid-March as fears over coronavirus mounted. It currently is trading at around 107.59.

The yen is generally considered a safe-haven asset that investors usually flock to during times of economic distress.

He explained that stock markets have rallied in recent days after hitting historic lows in March, but "credit markets have been more hesitant".

But Issel noted there will be a time lag before this happens, with credit markets expected to take at least six months to pick up.

"We think earnings in the US could drop close to 28-30% and yet the markets have recovered so strongly. We think the markets are probably due for a pause on the credit side for at least six months."

The S&P 500 has rallied roughly 25% from its lowest level in 2020 in recent weeks, but UBS Wealth Management thinks the further pain lies ahead for the dollar.

With interest rates so low, investors have poured money into equity markets over recent weeks.

JPMorgan, Citi, Bank of America and Morgan Stanley were only a few of the big US banks to report earnings last week during a tumultuous time.

Swiss banking giant Credit Suisse posted better than expected earnings Thursday, reporting a 75% increase in quarterly profits, but warned coronavirus could dent profits as the year progresses

Issel has become the latest voice to question why equities have rallied so quickly.

Citi warned on Wednesday that stocks have more to fall during the coronavirus and before that Goldman Sachs' top strategist Peter Oppenheimer voiced similar concerns that equities have rallied too sharply.

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