By Ye Xie and Ron Harui Dec. 28 (Bloomberg) -- The dollar rose for the first time in four days against the yen on speculation the U.S. economic recovery will boost Treasury yields, prompting Japanese investors to buy America’s government debt. The U.S. currency also gained on speculation a report tomorrow will show consumer confidence rose this month, encouraging the Federal Reserve to end emergency stimulus measures. The yen fell against all of its 16 most-traded counterparts as Japan’s manufacturers raised output in November at the fastest pace in six months, spurring risk demand. “The U.S. recovery is gaining some traction,” said David Cohen, an economist in Singapore at Action Economics, in a Bloomberg Television interview. “The yen is still under pressure.” The dollar advanced 0.3 percent to 91.55 yen at 9:50 a.m. in New York, from 91.30 on Dec. 25. The dollar will increase to 93 yen in the “near term,” according to Cohen. The U.S. currency traded at $1.4398 per euro, compared with $1.4411. The euro climbed 0.1 percent to 131.83 yen, from 131.64. Property values in 20 metropolitan areas in the U.S. probably fell 7.2 percent in October from a year earlier, the smallest 12-month drop since 2007, according to the median forecast in a Bloomberg survey of economists before a report tomorrow from S&P/Case-Shiller. The New York-based Conference Board’s consumer confidence index probably rose to 53 this month from 49.5 in November, a separate Bloomberg survey showed. Fed Rate View Futures trading in Chicago showed a 55 percent chance that the Fed will raise its target lending rate by at least a quarter-percentage point by its June meeting, up from 46 percent odds a week ago. The U.S. currency may extend gains versus the yen on bets rising Treasury yields will increase returns on dollar- denominated assets. Ten-year yields reached 3.85 percent today, the highest level in more than four months, before the Treasury’s sale of $44 billion in two-year notes today. The yield premium of 10-year notes over similar-maturity Japanese bonds reached 2.53 percentage points on Dec. 24, the highest level in two years. The gap was 2.51 points today. “Medium- to long-term U.S. yields may rise further should this week’s U.S. economic data releases beat forecasts and Treasury auctions not attract sufficient demand,” said Masafumi Yamamoto, chief foreign-exchange strategist in Tokyo at Barclays Plc. “Hence, the dollar-yen may test its October high.” Japan’s Economy The yen weakened versus the euro as signs of an improving Japanese economy boosted demand for higher-yielding assets. Factory production in Japan rose 2.6 percent last month after climbing 0.5 percent in October, the Trade Ministry said today in Tokyo. The median estimate of economists surveyed by Bloomberg News was for a 2.5 percent gain. Exports to China and Asia increased in November for the first time since September 2008, according to a Finance Ministry report released last week. Shipments to Asia advanced 4.7 percent in November from a year earlier, while exports to China climbed 7.8 percent. South Korea’s won advanced to its strongest level in more than a week after local companies won a $20 billion contract from the United Arab Emirates for a nuclear-power plant. “The Korean won jumped this morning due to the news of the nuclear-plant order,” said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul. “It’s very big news for us, although it doesn’t provide dollar supply directly. It’s very good news for the Korean economy.” The won strengthened 0.4 percent to 1,170.18 per dollar. It earlier touched 1,168.13, the strongest level since Dec. 17. To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net

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