The world's largest economy is the "prime market" for investment next year, according to the chairman of Switzerland's largest bank.

His comments come as market participants closely monitor global trade developments after President Donald Trump threatened to "substantially" increase tariffs if China failed to agree to a trade deal.

The U.S. and China have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

"The U.S. generally when you look at the outlook for growth is more positive than it is for Europe," UBS Chairman Axel Weber told CNBC's Joumanna Bercetchein an exclusive interview at the UBS European Conference in London on Wednesday.

"Trade disputes between China and the U.S. have a much bigger impact on the outlook for China in the negative sense than they have for the United States. It is impacting the U.S. as well but in a less pronounced way."

"So, if you look at for areas of growth and investment, the U.S. is the prime market," Weber said.

Expectations of a so-called "phase one" trade deal between the two economic giants have been rising in recent weeks, supporting stocks and riskier assets.

However, a lack of progress on an agreement has intensified concerns about whether a trade deal will take place at all.

Speaking at the Economic Club of New York on Tuesday, Trump said both sides were "close" to reaching a "phase one" trade deal but did not offer any details on where or when it might be signed.

The U.S. president also repeated an accusation of China "cheating" on trade, though he blamed the situation on past leaders of the world's largest economy.

"The question many clients ask is: So, what about the dollar? Now that the Fed has come down with rates, will the dollar move in the opposite direction?" Weber said.

"Short-term, it might be that there is some slight change but, long term, I think I am very dollar positive. The dollar will continue to be the major currency in the world and will continue to be very strong."

The dollar index was marginally higher on Wednesday, trading at 98.366 against of basket of six major currencies, up almost 0.1% on the day.

The Fed has cut interest rates three times in 2019 in what it has been characterized as a "midcycle adjustment."

The CME FedWatch tool, which reflects trading in fed funds futures, shows market expectations for another rate cut next month are very low, at less than 4%.

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US is the 'prime market' for investment in 2020, UBS Chairman Axel Weber says - CNBC