Day had four consecutive birdies on the back nine, including a 30-footer, for a three-under-par 68 that left him a stroke out of the second-round lead. Australian Lucas Herbert, who shot 66, is in front with a nine-under total of 133 on The Australian course in Sydney.
First-round leader Cameron Davis, who shot 72 Friday, is another stroke behind in third.
Defending champion Spieth earlier failed to take advantage of ideal morning scoring conditions and had a 71 to fall further behind the leaders — eight strokes behind Herbert and tied for 19th place with 10 others.
Spieth, who hasn't played since the Presidents Cup in late September, has won the Australian Open two out of the last three years and finished second the other time.
Day, who had seven birdies and four bogeys, is aiming to win his first Australian Open title in his first competitive appearance on home soil since 2013.
“It was quite tough out there today with the winds,” Day said. “But I played very well and gave myself a lot of opportunities for birdies.”
The 21-year-old Herbert led the Australian Open into the final round last year — when he finished seven shots off the pace in a tie for 20th — and is coming off a second-place finish in last week's New South Wales Open.
Canadian Mike Weir, the 2003 Masters champion, missed the cut, shooting 77-69. He's set to play in next week's Australian PGA at Royal Pines on Queensland state's Gold Coast, where Masters champion Sergio Garcia, Adam Scott and Marc Leishman are also entered.
Chawrasia extends lead at Hong Kong Open
S.S.P. Chawrasia extended his lead at the Hong Kong Open to two strokes Friday after a four-under 66 in the second round.
Chawrasia, who had led by one at the Hong Kong Golf Club, is at nine-under 131 overall and took as much as a five-stroke lead at one point.
Thomas Aiken (64) is second, followed by Alexander Bjork (66), Joakim Lagergren (66), Poom Saksansin (68) and Julian Suri (67) at five under 135.
Justin Rose (69) had six birdies, but three bogeys and a double-bogey at the par three 12th kept him at three under for the tournament.
Masters champion Sergio Garcia (71), playing for the first time in Hong Kong, was at even par, as was defending champion Sam Brazel (71) and 2014 champion Scott Hend (67).