* Dollar pauses, market awaits fresh cues

* Aussie near lows in wake of disappointing local jobs data

* GBP awaits UK retail sales data

By Ian Chua

SYDNEY, Jan 17 (Reuters) - The U.S. dollar faded a little on Friday after two days of gains, as a run of mixed U.S. economic data left the market uncertain about its future direction.

Investors had no such doubts about the Australian dollar which was pinned near three-and-a-half year lows in the wake of disappointing jobs figures.

The Aussie traded at $0.8816, having slumped more than 1 percent on Thursday to $0.8777 -- a low not seen since August 2010. Traders said good buying interest below 88 U.S. cents should provide some support for now.

"It will take a break below 0.8670 to trigger a deeper correction towards 0.8550/0.85 and 0.8060 ultimately," analysts at Societe Generale wrote in a note to clients.

Monthly momentum indicators were nearing oversold territory which could lead to a modest near-term bounce into the weekend.

Thursday's savage selloff saw the Australian currency fall more than 1 percent against the yen and euro as well. It came after data showed Australia's economy shed 22,600 jobs in December, confounding forecasts for a small increase.

The data rekindled speculation about another cut in interest rates by the Reserve Bank of Australia (RBA), though the further the Aussie falls, the less need there will be for an easing.

The RBA is looking for a lower currency to provide the economy an extra boost, having already cut its cash rate to a record low 2.5 percent.

With much of the market's wrath directed at the Aussie, the other major currencies pretty much traded sideways.

The dollar index was at 80.915, having slipped 0.1 percent overnight. The index is still back to where it was before last week's weak payrolls report sent it crashing.

Providing more evidence that the U.S. jobs figures were probably an exception, data on Thursday showed jobless claims fell in the latest week while the employment index of the Philadelphia Fed survey jumped

Against the yen, the greenback eased to 104.31 yen from a one-week peak of 104.925, while the euro drifted up to $1.3617 from a near one-week trough of $1.3583.

Sterling, however, dipped to a one-month low of $1.6316 before steadying at $1.6351. Just two weeks ago it stood at a two-year high of $1.6605.

Like its New Zealand counterpart, sterling is struggling to extend gains given that a lot of good news about the economy has already been priced in, traders said.

UK retail sales data due out later on Friday will offer more clues on how the British economy, a bright spot in Europe, is travelling.