LONDON, Dec 2 Reuters The dollar was pinned near 16week lows against a basket of major currencies on Friday ahead of key U.S. labour market data, while the yuan was set for its biggest weekly gain since China revalued its currency in 2005.

The dollar index , which measures the currency against six major peers including the yen and euro, fell 0.1 to 104.55, having earlier touched its lowest level since June 29 at 104.36.

The index slipped over 5 last month on expectations that the Federal Reserve would start to slow its pace of rate hikes from the December meeting.

Data released on Thursday supported that view, with the core personal consumption expenditures PCE price index coming in below expectations. The Fed tracks the PCE price indexes for its 2 inflation target.

Fed chair Jerome Powell said on Wednesday that it was time to slow rate hikes, noting that slowing down at this point is a good way to balance the risks.

Over the past few days there was sufficient cause for pricing out dollar strength because not just Powell39;s overall dovish speech, but also yesterday39;s US data hit the same deflation spot, Commerzbank analysts said in a note.

Investors are now turning their attention to nonfarm payrolls data on Friday for clues on how rate hikes have affected the labour market.

Markets are really buying into the pivot story from the Fed, said ING FX strategist Francesco Pesole, who noted sentiment is bearish on the dollar.

Considering what39;s come from the…