The Australian dollar hit a one-week high after European Central Bank (ECB) president Mario Draghi vowed to preserve the euro.
At 1700 AEST on Friday, the local unit was trading at 104.26 US cents, up from 103.39 cents on Thursday.
During the local session on Friday, the Australian peaked at 104.42 cents, its highest level since July 19.
On Thursday night (AEST), Dr Draghi told a business summit in London, the ECB would do "whatever it takes to preserve the euro. And believe me it will be enough".
CMC Markets foreign exchange dealer Tim Waterer said the staunch defence of the euro gave financial markets a much-needed pick me up.
"The Australian dollar tracked a path similar to that of global equity markets as traders took comfort from events in Europe," Mr Waterer said.
"If the better sentiment can find some legs into next week then 105.20 US cents starts looking like a short term target (for the Australian dollar)."
Immediately after the ECB president's bullish remarks, the euro soared two US cents and peaked at a three-week high of 123.30 US cents.
"The euro was launched at a near 90 degree angle against the US dollar after the ECB president sounded resolute in his remarks," Mr Waterer said.
The US will release its June quarter gross domestic product figures on Friday night, Australian time.
Mr Waterer said the data would be the key factor as to whether the Australian dollar could continue its momentum.
At 1700 AEST, the Australian dollar was at 81.65 Japanese yen, up from Thursday's close of 80.84 yen, and at 84.82 euro cents, down from 85.09 euro cents.
Meanwhile, Australian bond futures prices fell.
Westpac global head of interest rate strategy Russell Jones said Dr Draghi's comments showed that the ECB was prepared to do more that what most people had expected.
"He's created an expectation of a change in policy and a different approach, that's been reflected in the way things have been pricing in Asia today," Mr Jones said.
"Therefore some of the safe-haven flows into Aussie government bonds have reversed."
At 1630 AEST on Friday, the September 10-year bond futures contract was trading at 97.090 (implying a yield of 2.910 per cent), down from 97.265 (2.735 per cent) on Thursday.
The September three-year bond futures contract was at 97.590 (2.410 per cent), down from 97.800 (2.200 per cent).
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