By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, Dec 4 (Reuters) - The Australian and New Zealand dollars held near recent peaks on Friday with further easing by the European Central Bank (ECB) putting them on track to end the week sharply higher against their U.S. counterpart.
They were not so lucky against the euro which was swept up in a massive short squeeze after the ECB proved less aggressive than many bears were betting on.
The Australian dollar held at $0.7332, having climbed to an 8-week peak of $0.7365 on Thursday. Heavy resistance was found at the Oct. 12 trend high of $0.7382.
Underpinning was data showing Australian retail sales boasted a third month of solid growth in October.
The Aussie is up 1.9 percent this week, partly due to its attractive government bond yields which compare with negative rates in Germany and France on the short end of the curve.
"Australian two-year bond yields remain above the Reserve Bank of Australia's 2.0 percent cash rate, reflective of the better-performing Australian economy," said Peter Dragicevich, a senior strategist at Commonwealth Bank of Australia.
The ECB put its deposit rate deeper into negative territory and extended its asset buying by six months. Still, it disappointed markets which had expected a bolder stimulus package and set a fire under the euro.
The euro was last at A$1.4890, having surged from a five-month trough of A$1.4368 on Thursday.
The New Zealand dollar NZD=D4 edged down to $0.6675 from a one-month high of $0.6706 set the previous session. It was on track with a weekly gain of 2.1 percent.
Investors are now focused on U.S. jobs data, where an upbeat report would cement expectations that the Federal Reserve will hike interest rates later this month.
"We still expect that NZD will struggle to break through $0.6700 in the near-term, but a weak set of U.S. employment reports tonight could do so," BNZ analyst Raiko Shareef said in a research note.
The euro also rallied hard on the kiwi to reach NZ$1.6363, having gained 2.3 percent overnight.
New Zealand government bonds eased, sending yields between 3 and 4.5 basis points higher.
Australian government bond futures fell in a bearish steepening of the curve, with the three-year bond contract off 6 ticks at 97.820.
The 10-year contract YTCc1 skidded 11 ticks to 97.0200, while the 20-year contract YXXc1 also eased 11 ticks to 96.5200.