April 6 (Bloomberg) -- The dollar traded near a five-month high against the yen in Tokyo on expectations a government report today will show Japan's economic outlook is faltering, in contrast to forecasts for U.S. growth.

Japan's index of leading economic indicators probably fell to the lowest in more than three years. The dollar is up about 2.5 percent versus the yen and 2 percent against the euro since the Federal Reserve raised borrowing costs on March 22 and said inflation pressures are building.

``We're seeing relatively strong growth in the U.S. and growth in Europe and Japan has been less than robust,'' said Greg Gibbs, senior currency strategist in Sydney at RBC Capital Markets. ``Over the next one to three months, we'll see the dollar move a little bit higher.''

The dollar traded at 108.40 yen at 9:17 a.m. in Tokyo, from 108.17 late yesterday in New York, according to electronic foreign exchange trading system EBS. It was also at $1.2842 per euro, from $1.2869. The dollar may rise to 110 yen in the next couple of months, Gibbs said.

The index, which measures indicators such as job offers and consumer confidence, fell to 20 percent in February, from 54.4 percent in the previous month, based on the median forecast of 21 economists surveyed by Bloomberg News. Japan's Cabinet Office will release the report at 2 p.m. local time.

`Deeply Rooted'

The U.S. currency may also advance on expectations Fed policy makers speaking this week will highlight the risk of faster inflation and signal further interest rate increases, while central banks in Japan and the euro region keep their benchmarks unchanged this week.

Five central bank policy makers speak this week. The Bank of Japan will keep interest rates at almost zero when it concludes its policy meeting today, said all 14 economists surveyed by Bloomberg News. The European Central Bank will keep its main rate at 2 percent on April 7, a separate survey showed.

``The dollar strength looks deeply rooted,'' said Mitsuo Imaizumi, a trader at Daiwa Securities SMBC in Tokyo. ``Every time it comes off a bit, dollar buying emerges. Fed speakers this week are likely to be hawkish on rates.''

To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net.

Last Updated: April 5, 2005 20:22 EDT