SYDNEY: The Australian and New Zealand dollars were trading higher against the greenback on Tuesday, as improved market sentiment and optimistic economic surveys pushed the risk-sensitive currencies to multi-week highs.

The Aussie was 0.32% higher to $0.7727 against the greenback, its highest since Jan. 27, climbing toward its January peak of $0.7819 as a survey of business confidence pointed to an ongoing economic recovery for the Antipodean country.

The National Australia Bank's index of business confidence doubled to +10 points in January, even as conditions eased back from historic highs as coronavirus breakouts curbed activity in a few cities but were ultimately contained.

Across the Tasman, the kiwi dollar traded 0.46% higher to $0.7253, the highest in a month, after finding support at $0.7220, as it edges towards its the January top of $0.7314.

Asian stock markets rose on Tuesday after a record-setting day on Wall Street, while Oil also hit 13-month highs, helped by rising optimism about a return in fuel demand.

"Both currencies today are reacting to the very strong session overnight in US equities, oil and precious metals, and then the local data have really boosted both Aussie and the Kiwi," said Steven Dooley, APAC currency strategist at Western Union Business Solutions.

New Zealand inflation expectations for the year posted a large rise to 1.77%, from 1.23% previously, a survey by the central bank showed, while two-year expectations rose 30 basis points to 1.89%.

"Markets have acknowledged New Zealand's successful Covid management and ensuing economic recovery, but recent economic data has surprised even the most optimistic pundits," Westpac analysts said in a note to clients.

Yields on 10-year paper surged to a 11-month high of 1.45%, from 1.15% at the beginning of the month and a trough of 0.49% back in September. Australian 10-year bond yields were at 1.23%, down from 1.27%.