The Australian dollar is more than half a US cent higher on comments suggesting the European Central Bank (ECB) could take a greater role in curbing euro zone debt.
At 0700 AEST on Friday, the Australian dollar was trading at 103.98 US cents, up from 103.39 US cents at 1700 AEST on Thursday.
HiFX senior trader Stuart Ive said ECB president Mario Draghi's pledge to do anything within his mandate to save the euro zone had encouraged markets.
"I don't think the Germans will be too happy about the idea of the ECB buying more in-debt bonds, but the implication is there, certainly, that it might be able to help these ailing countries, one way or another," he said.
"But what matters is the attitude Draghi's expressed: that he'll do whatever it takes."
Mr Draghi suggested the ECB could take action to stem instability within euro zone bond markets and claimed the euro currency was irreversible.
Mr Ive said that a lack of other economic news gave this commentary greater strength, particularly in light of the dangerous rises in some European bond yields.
US gross domestic product (GDP) figures due on Friday would be the next important event for market, Mr Ive said.