By Cecile Lefort and Charlotte Greenfield
SYDNEY/WELLINGTON, March 11 (Reuters) - The Australian and New Zealand dollars nursed losses against the euro on Friday after the European Central Bank indicated there might be little room for more rate cuts, leaving them with hefty losses for the week.
The euro stood at NZ$1.6732 EURNZD=R , having gained two cents in one session, putting it on track for a 3.7 percent weekly rise. It was also up at A$1.4970 EURAUD=R and poised to end the week 1.4 percent higher.
The euro initially fell after the ECB cut deposit rates and expanded its bond-buying programme to include corporate debt. But all that changed when ECB chief Mario Draghi said they had no plans to cut rates any further.
Against its U.S. counterpart, the Australian dollar AUD=D4 had a milder session at $0.7470, still within reach of an eight-month summit of $0.7528. It was on track for a 0.4 percent gain for the week, having leapt three cents since March 1.
It also stood tall on a trade-weighted basis at 63.8 =AUD , a level not seen since July and poised to post a fourth week of increases.
The Aussie took a breather against its kiwi neighbour at NZ$1.1153 AUDNZD=R , having touched a 5-month peak of NZ$1.1285 on Thursday when the Reserve Bank of New Zealand shocked with an interest rate cut and flagged possibly more. a clear acceleration of policy easing expectations in New Zealand, we have seen AUD/NZD enter a new and likely higher range," said ANZ, adding it was expecting two more rate cuts.
"We do not expect this trend to reverse soon and note that a test towards the NZ$1.1430 level cannot be ruled out over the coming weeks."
The New Zealand dollar NZD=D4 edged up to $0.6683 on Friday after falling as low as $0.6618 the previous session. It is still down 1.8 percent so far this week, largely due to the RBNZ's rate cut.
"After the initial gap lower, the NZD quickly composed itself and has consolidated above 0.6650 overnight. Downward momentum may prove short-lived," said Kim Martin, senior market strategist at BNZ, in a research note.
Of 12 economists polled following Thursday's surprise move, three expect the central bank to cut rates to 2.00 percent at the April review. Eleven of 12 see rates at 2.00 percent at the June meeting. Zealand government bonds 0#NZTSY= eased, sending yields 2 basis points higher at the long end of the curve.
Tracking a decline in U.S. Treasuries, Australian government bond futures extended losses.
The three-year bond contract YTTc1 shed 3.5 ticks at 97.995, having touched its lowest in two months. The 10-year contract YTCc1 fell 4.75 ticks to 97.3550, while the 20-year contract YXXc1 eased 6.5 ticks to 98.8150.