UPDATE: The Australian dollar closed slightly lower on Friday as traders sat on the sidelines ahead of US gross domestic product data and a speech by US Federal Reserve chairman Ben Bernanke to global central bankers in the United States .
At 5pm on Friday, the local unit was trading at US.8869/71, slightly down from Thursday's close of US.8875/79.
Since 7am, the local currency traded between US.8846 and US.8878.
CMC markets foreign exchange dealer Tim Waterer said the Australian dollar has made up some ground against the US dollar after opening lower in the local day session.
"In terms of the Aussie against the US today, it's creeping higher, essentially it hasn't deviated to far from that 88.50 (US cents) level, much of the day," he said.
In recent weeks there has been a string of weak economic data from the US, raising fears the American economy may be falling into a double dip recession.
This could spark action from the US central bank to put more stimulus into the economy.
"Whatever comes out in terms of that GDP number, you could expect there's going to be some erratic trading in the US dollar.
"If the market were to see a print of say 2 per cent GDP (growth), which would be above market expectations, we could see some rallying in the US dollar.
"The Aussie could benefit as a result of that as well, from a global growth viewpoint.
Mr Waterer said traders would be keenly noting Dr Bernanke's tone later this evening, whether he was going to be more dovish than he had been previously about whether monetary policy would be eased further.
Meanwhile, the Australian share market closed moderately higher, building on Thursday's positive performance, ahead of the release of revised US June quarter growth figures later Friday night.
The benchmark S&P/ASX200 index was 14.1 points, or 0.32 per cent, higher at 4370.1 points, while the broader All Ordinaries index rose 14.7 points, or 0.33 per cent, to 4404.1 points.
On the Sydney Futures Exchange, the September share price index futures contract was seven points higher at 4348 on volume of 25,785 contracts.
On Friday the local share market recovered ground thanks to investors rewarding high-performing companies, RBS Morgans director of equities Bill Chatterton said.
"The reporting season, on balance, I thought was pretty good. But the market to date hasn't responded to that," he said.
Mr Chatterton said the local market was supported by buying into stocks that had announced good results and outlooks including Suncorp-Metway Ltd and Woolworths.
"(Investors) are picking on some of the better performers in terms of that reporting period and adding to some of those stocks."
Ord Minnett investment adviser Francesco De Stradis said the reporting season had been "pretty reasonable" given the potential for disappointing results from some companies.
He said the local market had strengthened during the session on a weaker lead from Wall Street but all eyes would be on the revised US June quarter GDP figures, which were expected to show a slowing economy.
"The initial estimate was 2.4 per cent and now US economists are expecting the economy grew by only 1.4 per cent," he said.
"If it comes in below 1.5 per cent, I would suggest the market might get a bit of a sell-off overseas."
Suncorp added nine cents or 1.09 per cent to $8.35, while the big four banks put in a mixed performance on Friday.
Westpac gained 20 cents or 0.93 per cent to $21.75, but ANZ Banking Group fell three cents to $22.44.
National Australia Bank added four cents to $23.05 and Commonwealth Bank firmed 23 cents to $49.21.
Woolworths jumped 31 cents or 1.13 per cent to $27.85 thanks to its on-market share buy-back announced on Thursday.
Mr Chatterton said BHP Billiton and Rio Tinto did not participate in Friday's market action, with BHP losing nine cents to $37.30 and Rio down 30 cents to $69.30.
"BHP is an enormous opportunity, but the market is hesitant due to Potash," he said, referring to BHP's $44 billion bid for Potash Corporation of Saskatchewan.
Fairfax Media Ltd's return to profitability pushed its shares up six cents, or 4.41 per cent to $1.42.
Fairfax reported a net profit of $282.12 million in the year to June 30, 2010, up from a loss of $380.05 million in the prior year.
"The result was above expectations and it was a good outlook statement especially given the discretionary spending space is quite tough," Mr De Stradis said.
Sims Metal Management Ltd surged 82 cents, or 5.28 per cent to $16.36 after it returned to profitability.
The spot price of gold in Sydney traded at $1236.32 a fine ounce, down $US4.21 on Thursday's closing price of $US1240.53.
News Corporation fell seven cents to $15.54 and its non-voting scrip lost seven cents to $13.74.
Toll road operator and takeover target Intoll Group was the top traded stock by volume, with 125.2 million shares traded for $184.9 million.
Intoll's shares gained two cents to $1.47.
National turnover reached 1.9 billion shares, worth $6.72 billion, with 560 stocks trading up, 457 down, and 374 unchanged.
