The Australian dollar has bounced back against its US counterpart as geopolitical tensions and uneven US data continue to plague the currency.

At 0630 AEST on Friday, the Australian dollar was worth 79.49 US cents, up from 79.01 US cents on Thursday when the local currency fell after the US dollar rallied on data that showed its economy grew at an annual pace of three per cent in the June quarter, up from the 2.6 per cent preliminary estimate.

FX Strategy managing director Kathy Lien said geopolitical tensions continue to weigh on the US dollar, with North Korea still not officially backing down and after US President Donald Trump’s administration prompted drama with Russia by ordering the closure of three Russian diplomatic facilities in the US.

Lien said that combined with “uneven” economic data sent the US dollar spiralling overnight.

“After racing higher before the start of the North American trading session, the dollar (US) nosedived on the back of economic reports,” Ms Lien said on Friday.

Data from outplacement consultancy firm Challenger showed an increase in lay-offs, while jobless claims rose slightly and personal income growth accelerated.

But US personal spending growth missed expectations.

“In a nutshell these reports were not strong enough to sustain the dollar’s (US) rally,” Lien said.

She said the upcoming non-farm payrolls could “make or break” the US dollar because it’s the last release before the US Federal Reserve meets next month.

“When it comes to this report, the only question that matters is whether job and wage growth is strong enough for the Federal Reserve to raise interest rates at the end of the year.”

Meanwhile, the local currency has also made strong gains against the yen and the euro.

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