The Australian dollar closed 1.6 US cents higher after strong corporate results in the US lifted investor sentiment for high-yielding assets.
At 1700 AEST on Friday, the Australian dollar was trading at $US0.8928/30, up 1.84 per cent from Thursday's close of $US0.8767/69.
It was also buying 69.4 euro cents, 58.4 pence and 77.6 yen.
Since 0700 AEST, the domestic dollar traded between $US0.8898 and $US0.8951.
Growth assets such as equities and commodity-driven currencies like the Australian dollar rallied during Thursday's offshore session as solid company reports lifted investor optimism about the US economy.
Against the greenback, the Aussie dollar has risen about 3.7 per cent from its lows of the week, recorded on Monday, when it was worth just 86.33 US cents.
The Australian dollar is the strongest performer of the world's 16 major currencies this week. Against the euro, it has risen from a low of 66.79 euro cents early in the week to 69.37 euro cents this morning. That is an increase of 3.9 per cent.
See how the $A is faring against major currencies
Wall Street closed higher following strong second-quarter earnings results from companies including Caterpillar, AT&T, 3M, UPS, American Express and Microsoft.
The Dow Jones industrial average index ended well up 1.99 per cent.
Equity markets in Asia followed the positive lead from Wall Street.
Australia’s benchmark S&P/ASX200 Index ended up 1.9 per cent, while Japan’s Nikkei-225 index jumped 2.3 per cent higher.
Westpac senior currency strategist Sean Callow said the bounce on equity markets dragged the Australian dollar higher.
''It really just roared last night on the back of the steep improvement on risk appetite, particularly in the US stock market,'' Mr Callow said.
''There was no way the Aussie dollar was ever going to ignore a two plus per cent rise in the S&P/500.''
The Australian dollar hit $US0.8953 during Thursday's offshore session, the local currency's highest level since May 14, 2010.
Mr Callow said the currency remained well supported during Asian trade, despite the rise in equity markets throughout the region less strong than in the US.
''There is a little bit more caution in Asia than there was in the US, so that has prevented the Aussie going higher from here,'' Mr Callow said.
''People are both waiting for the European stress tests and next round of earnings from Wall Street.''
Economic events due during Friday's offshore session (AEST) include the results from stress tests of European banks.
The Committee of European Banking Supervisors is scheduled to publish the European-wide stress tests at 1800 Central European Summer Time (0200 AEST on Saturday).
Mr Callow forecast the Australian dollar to trade between $US0.8850 and $US0.8990 during Friday's offshore session.
At 1600 AEST, the RBA's trade weighted index (TWI) was at 69.3, up from Thursday's close of 68.4.
AAP