During early deals on Tuesday, the Australian dollar rose to new multi-month highs against its Japanese, US and Canadian counterparts as stocks across the Asia-Pacific region surged following a strong triple-digit gain on Wall Street overnight on optimism the U.S. Treasury's plan to remove banks' toxic assets will stimulate economic growth.

The aussie also reached a 6-week high against the European currency. Meanwhile, the New Zealand dollar climbed to new multi-month highs against the US currency and the Japanese yen.

Australia's benchmark S&P/ASX 200 index .AXJO was up 39.4 points at 3,589.7 by 0310 GMT, after earlier gaining as much as 2.6 percent to its best intra-day level since mid January. The index rose 2.3 percent on Monday to its highest close in five weeks.

New Zealand's NZX-50 index .NZ50 also eased after a strong start and was last 1.8 percent higher at 2,638.7.

On Wall Street, U.S. stocks closed Monday's trading session sharply higher, and more than offsetting the losses posted in the two previous sessions, after the U.S. administration released the details of its latest plan to solve the massive, debilitating banking crisis. This was also combined with better than expected data on home sales. The Dow closed up 497 points or 6.84% at 7,776, the Nasdaq gained 99 points or 6.76% to 1,556, and the S&P 500 advanced 54 points or 7.08% to finish at 823.

The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.

Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.

Against the US dollar, the Australian currency edged higher to 0.7096 during early Asian deals on Tuesday. This set the highest point for the pair since January 9, 2009. If the pair gains further, 0.727 is seen as the next target level. The aussie-dollar pair that closed Monday's New York deals at 0.7054 is worth 0.7075 at 11:05 pm ET.

The Australian dollar that closed Monday's North American session at 1.9337 against the European currency reached a 6-week high of 1.9274 at 9:00 pm ET. The euro-aussie pair is currently trading at 1.9334 with 1.906 seen as the next target level.

During Tuesday's early Asian deals, the Australian currency rose to 69.51 against the Japanese yen. This set the highest mark for the pair since November 5, 2008. The next upside target level for the aussie-yen pair is seen around 72.0. The Australian dollar is currently trading at 69.13 versus yen, compared to Monday's closing value of 68.40.

The board members of the Bank of Japan suggested that the Japanese economy may begin to recover from the current recession in the second half of this year at the earliest, minutes from the February 18 and 19 monetary policy meeting revealed today.

The members also said that they may need to cut their view of Japan's long-term growth - especially since there was more demand than expected for BoJ funds. The board also said that an exit strategy was needed for the series of economic stimulus measures.

At the meeting, the board voted unanimously to keep the overnight call rate unchanged at 0.10 percent. The bank cut rates in December by 20 basis points to the current level - marking the first easing October 31, when the bank lowered rates by 20 basis points from 0.50 percent. That rate cut was the bank's first in seven years, and it snapped a strong of 22 consecutive meetings of keeping the rates on hold. The BoJ had kept rates unchanged since a 0.25 percent increase in February 2007.

The Australian dollar traded higher against its Canadian counterpart during early deals on Tuesday. At 8:50 pm ET, the aussie-loonie pair advanced to 0.8663, its highest level since January 5, 2009. If the pair gains further, 0.877 is seen as the next target level. The Australian currency that closed yesterday's deals at 0.8618 is presently quoted at 0.8639.

The New Zealand dollar spiked up to new multi-month highs of 56.20 against the Japanese yen and 0.5751 against the greenback during Tuesday's early trading. This may be compared to Monday's closing values of 55.48 and 0.5721, respectively.

On the upside, the NZ dollar may likely find resistance near the 59.6 level against the Japanese unit and 0.587 level against the greenback.

Against the Australian currency, the New Zealand dollar showed weakness during Tuesday's early Asian trading. At 9:20 pm ET, the kiwi touched a 5-day low of 1.2405 versus the aussie, compared to 1.2344 hit late New York Monday. On the downside, 1.258 is seen as the next target level for the New Zealand currency. The pair is now worth 1.2370.

The NZ dollar lost ground after hitting a high of 2.3794 against the European currency during early Asian deals on Tuesday. At 11:15 pm ET, the kiwi slipped to 2.3927 against the euro, compared to yesterday's closing value of 2.3856. The next downside target level for the New Zealand currency is seen around 2.432.

The French February consumer spending and business confidence indicator for March, Euro-zone January current account, UK February CPI and the manufacturing PMI reports from the major European economies are expected to influence trading in the European session today.

Across the Atlantic, today will be a busy day including a testimony on AIG from Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner to the U.S. House Financial Services Committee.

AIG has come under severe attack for awarding multimillion-dollar bonuses to executives following a $180 billion bailout from the U.S. government.

Markets will also receive information on the Richmond region manufacturing sector. The Richmond Fed manufacturing index is expected to remain unchanged at -51 in March.

The Federal Housing Finance Agency will also release its house price index for January. House prices are expected to fall 0.9% against a 0.1% increase in December.

In the afternoon, James Bullard, President of the Federal Reserve Bank of St. Louis, will speak in London.

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