The Australian dollar was firmer after lifting back above 105 US cents in response to a positive session on US equity markets in offshore trading.
At 1700 AEDT, the Australian dollar was at 105.28 US cents, up from Thursday's close at 104.50 US cents.
During the day, the local currency moved between a high of 105.51 US cents and low of 105.11 US cents, according to IRESS data.
The local unit broke through 105 US cents overnight as a positive finish on Wall Street prompted investors to exit some US dollar positions in favour of currencies such as the Australian and New Zealand dollars.
The Australian dollar gave up some of those gains during Friday's local session as market players sought to take profits from its recent appreciation against the US dollar and Japanese yen.
CMC Markets senior dealer Tim Waterer said the Australian dollar was trading in subdued conditions.
"It would appear that traders are waiting to see an improvement in Australian economic indicators before jumping back into the Australian dollar with any sort of confidence," Mr Waterer said in a research note dated March 16.
A senior currency analyst at financial markets research group Forecast, Lee Wai Tuck, said the Australian dollar had come under some pressure as investors sought to sell the currency on rallies.
Mr Lee said the Chinese government's recent downgrade of economic growth targets, as well as ongoing worries about euro zone sovereign debt and some sluggish Australian economic data, were behind the greater willingness to offload the currency.
"The sentiment has changed a bit," Mr Lee said from Singapore.
The Australian dollar reached a 10-month high of 88.10 during the Asian trading day.
At 1700 AEDT, the Australian dollar was at 87.92 Japanese yen, up from Thursday's local close of 87.82 yen, having earlier touched a 10-month high of 88.10 yen.
The local unit was at 80.45 euro cents, up from 80.27 euro cents.
Meanwhile, the local bond market closed firmer.
At 1630 AEDT, the June 10-year bond futures contract was trading at 95.710 (implying a yield of 4.290 per cent), up from Thursday's close of 95.680 (4.320 per cent).
The June three-year bond futures contract was at 96.200 (3.800 per cent), little changed from the previous close of 96.190 (3.810 per cent).
The local bond market opened stronger as investors reversed the recent sell-off during the overnight session.
However, bonds gave up some of those gains during a quiet local session as market players absorbed Friday's government bond tender.
The local session also featured some Kangaroo bonds - Australian dollar denominated bonds issued in the local market by non-Australian firms - and covered bonds issuance.
RBC Capital Markets fixed interest strategist Su-Lin Ong said the market absorbed quite a lot of supply on Friday.
"It's really the supply factor that's probably been the key story today," Ms Ong said.
The Reserve Bank of Australia's trade weighted index was at 78.3, up from 78.1 on Thursday.
