The Australian dollar was trading up 0.67 per cent from Thursday's close of $US0.87.
Since its local close on Thursday, the domestic dollar traded between $US0.8728 and $US0.8850.
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The US dollar weakened during Thursday's offshore session (AEST) after manufacturing data raised concerns about the strength of the US economic recovery.
The Federal Reserve report on industrial production showed that overall output at the nation's factories, mines and utilities rose 0.1 per cent in June. It was the fourth straight monthly gain.
But factory output - the largest component of industrial production - dropped 0.4 per cent.
Also, two manufacturing surveys indicated expansion in factory activity had slowed significantly in the north-eastern region of the US during July.
Bank of New Zealand head of foreign exchange, Mike Symonds, said the US dollar weakened during the offshore session on continuing worries about the American economy.
"The US dollar index posted a two month low on ongoing concerns about the health of the US economy," Mr Symonds said from Wellington.
"We had some pretty weak manufacturing data overnight."
Mr Symonds said the Australian dollar had weakened during London trade before recovering due to a weaker US currency.
"The (US) dollar has been under pressure across the board and the Aussie has managed to recoup those losses, and pushed back above 88 cents," he said.
With no economic data due domestically, Mr Symonds forecast the Australian dollar to trade between $US0.8760 and $US0.8850 during today's domestic session.
