THE Australian dollar was slightly weaker, as equities came under pressure, and investors took the opportunity to sell the currency after a two-year high this week.
The local unit spiked later in the afternoon as the Japanese yen lost ground after reports the Bank of Japan intervened to stop the currency appreciating.
At 5pm AEST, the Australian dollar was trading at 94.94 US cents, down from Thursday's close of 95.62 cents.
Since 0700 AEST, the local unit traded between 94.62 cents and 95.24 cents.
IG Markets institutional trader Chris Weston said the Australian dollar drifted downwards on a weaker equity performance in Europe and the US.
``I think the Aussie just went along for the ride,'' Mr Weston said.
Growth across the 16-nation eurozone economy slumped to a seven-month low in September, with a leading indicator logging its steepest fall since the early days of the global financial crisis.
Australian shares closed two-thirds of a per cent lower on Friday, as local investors reacted to a weak US lead and awaited new US economic data.
Traders said the Bank of Japan intervened in the currency market to weaken the yen Friday for the second time in just over a week.
In early afternoon trading on Friday in Tokyo, the US dollar jumped suddenly from mid-84 yen to as high as 85.38 yen.
Mr Weston said there was no other reason why the Australian dollar would have spiked.
``There was no data coming out, there was nothing else for the Aussie to rally on,'' Mr Weston said.
``The Aussie rallied because of the weakness of the yen that boosted the Asian equity markets.''
The local currency began the week at 93.60 and climbed to just shy of 96 US cents to reach its highest level since 97.92 US cents on July 25, 2008.
Mr Weston said the Australian dollar would hover around the 95 US cent mark in the lead-up to the release of US durable goods and new homes data.
But markets were uncertain about the upcoming offshore session following weak data out of the US and Europe overnight, he said.
