The Australian currency was stronger by Friday noon on reports China could diversify its foreign exchange reserves into commodity currencies.

At 12pm (AEST), the domestic dollar was changing hands at 91.09 US cents, up from Thursday's finish of 90.72 US cents. The Aussie was also buying 76.84 yen, 70.97 euro cents and 59.04 pence.

Since 7am, it ranged from 90.88 to 91.16 US cents.

The Australian dollar rose on speculations that China was looking to diversify its foreign exchange reserves away from the traditional G4 currencies and into commodity currencies such as the Aussie and the Canadian dollar, according to CMC Markets foreign exchange dealer Tim Waterer.

He said markets reacted to the rumours although he cannot explain "how concrete it is at the moment.''

''There's talk coming out of China that there may be some growing interest in terms of the commodity currencies such as the Aussie dollar, and that's really behind the move from just below 91 cents to about 91.1 US cents.

''There appears to be some increased buying on that talk coming out of China.''

Mr Waterer predicts relatively subdued trade as investors await the release of US non-farm payrolls numbers during the offshore session.

''Ninety-two cents is certainly within the realms of possibility, if not tonight, next week, but I think the gains for the local session will be capped somewhere around the 91.4 (US cent) mark just because we've got a very big US jobs number,'' he said.