By Cecile Lefort
SYDNEY, Jan 6 (Reuters) - The Australian and New Zealand dollars held near three-week highs on Friday as their U.S. counterpart's bullish run came to a screeching halt, putting them on track for a strong start to the year.
The Australian dollar AUD=D4 was steady at $0.7330 AUD=D4 , having rallied 0.7 percent overnight when it touched a three-week high of $0.7356.
It has gained nearly 2 percent this week, and if sustained, it would be the largest such increase in about a year. Resistance was found at the Dec. 16 top of $0.7370 with support around $0.7330.
The currency received a further fillip after Australia boasted its first trade surplus in almost three years in November, as surging commodity prices boosted export earnings beyond all expectations. jumped by 8.4 percent, or a whopping A$2.3 billion, with iron ore and coal, Australia's top exports, each showing double-digit gains.
The trade surplus will likely mean that Australia's economy will just manage to escape recession, said Paul Dales, chief economist for Australia & New Zealand at Capital Economics.
Australia's gross domestic product shrank for the first time since 2011 in the third quarter, raising the spectre of a possible recession following 25 years of growth.
Investors are now focused on Friday's U.S. non-farm payrolls report in which economists expected job gains of 178,000 in December. ECONUS
The New Zealand dollar NZD=D4 touched its highest in three weeks at $0.7040, to be last at $0.7014. It has gained 1.1 percent this week and the next big level is $0.7050, the 61.8 percent retracement of its December fall.
A dearth of domestic data has seen the kiwi track to the whims of the U.S. currency in recent days.
The country's central bank holds its next policy meeting on Feb. 9 and is considered certain to keep rates at 1.75 percent, with the market wagering it will remain there for much of the coming year.
New Zealand government bonds 0#NZTSY= extended their rally, with yields falling as much as 6 basis points at the longer end. Yields on 10-year paper have dropped 30 basis points in just five sessions.
Australian government bond futures rose, with the three-year bond contract YTTc1 up 3 ticks at 98.010. The 10-year contract YTCc1 added 4.5 ticks to 97.2650, while the 20-year contract YXXc1 gained 6.5 ticks to 96.6400. (Editing by Randy Fabi)