The Australian dollar has bounced back above 78 US cents as rising oil prices give risk appetite a boost.

At 0700 AEDT on Friday, the local currency was trading at 78.04 US cents, up from 77.72 cents on Thursday.

The Australian dollar has bounced as high as 78.25 US cents as a lift in oil prices overnight stoked risk appetite, putting downward pressure on the US dollar.

It also helped share markets rally while weakening safe haven assets, like bonds.

“The US dollar sagged as risk sentiment swung higher again,” Westpac analysts said.

Coming up today will be the Reserve Bank of Australia’s quarterly Statement on Monetary Policy where investors are expecting the central bank to revise its key economic forecasts.

AAP