* Asia stocks slip from two-year high, tech still weighs
* Positioning may slow US dollar losses
* Focus on China at G7 may make Japan intervention tough
By Kevin Plumberg
HONG KONG, Oct 8 (Reuters) - Investors took profits on
Asian equities and gold while also buying back some U.S.
dollars on Friday, squaring up before the latest U.S.
employment report and potentially contentious international
meetings about currencies.
Bets against the U.S. dollar have grown significantly since
September because of increased expectations the Federal Reserve
will print money to buy debt, and that may limit the downside
if the payrolls number is a lot lower than expected.
Still, if the Fed follows suit with the Bank of Japan and
gets more aggressive about easing policy than the market
anticipates, the cheap money trade of selling dollars and
buying gold, emerging market equities and longer-term bonds
will undoubtedly spread.
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For a preview of U.S. non-farm payrolls, click
http://link.reuters.com/nem47p
For PDF on global currency tension, click
http://r.reuters.com/dyw27p
For more on the G7/IMF meetings, click
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Japan's Nikkei share average slipped 0.5 percent <>
after hitting a two-month intraday high on Thursday.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> edged 0.4 percent lower after closing at a
28-month high on Thursday. Declines were spread evenly across
most sectors, though the technology sector underperformed for a
second day.
In the foreign exchange market, the euro <EUR=>, which has
benefited from dollar weakness, was largely unchanged at
$1.3917 after the currency reached an eight-month high around
$1.4030 on Thursday.
The rapid increase of bets on the euro means the threshold
for more dollar weakness after the U.S. payrolls figure is
high.
"Positioning could limit the degree of dollar downside,
particularly against the euro," Todd Elmer, currency strategist
with Citi in Singapore, said in a note.
"This likely means that the bar for a dollar-positive
surprise on the upside is somewhat lower and a just above
consensus outcome may not be a significant spark for
volatility."
The dollar was trading at 82.35 yen <JPY=>, above a 15-year
low of 82.11 yen plumbed on Thursday.
The outcome of the Group of Seven rich nations meeting this
weekend could influence views on when Japanese officials will
intervene again to pull down the yen.
Japan's first intervention in six years last month sparked
a heated debate globally -- what some have even called a
currency war -- about what governments can do to keep their
currencies from strengthening against the falling dollar.
"There's speculation that, if the G7 wants a coordinated
stance to put pressure on China to raise the yuan, then it
becomes more difficult for Japan to intervene," said a dealer
at a Japanese brokerage house.
Gold prices slipped in the spot market, falling 0.2 percent
to $1,330.30 an ounce <XAU=>. The precious metal traded in a
wide range on Thursday, hitting an all-time high of $1,364.60
but then ending the session around $1.332.70.
The 90-day inverse correlation between gold and the U.S.
dollar is the strongest it has been all year, meaning when one
falls, the other is very much likely to rise based on price
action over the past three months.
(Additional reporting by Hideyuki Sano in TOKYO; Alex
Richardson)
