The Australian dollar edged higher to around $0.651 on Tuesday, following a decline in the previous session, as market sentiment turned cautiously optimistic amid an extended US-China trade truce and anticipation ahead of the Reserve Bank of Australia's policy decision. The US-China trade truce has been extended for another 90 days, aiming to ease tensions and allow room for continued negotiations - a move seen as a positive step toward avoiding further escalation of the ongoing trade dispute. In Australia, investors are closely watching the RBA’s interest rate decision, expected later today, with growing expectations of a third rate cut in the current easing cycle. Markets expect a 25 bps reduction in the official cash rate to 3.60%, as core inflation currently stands at 2.7% year-on-year. While the central bank is expected to remain upbeat about the strength of the labor market, it may adopt a cautious tone given the recent uptick in the unemployment rate.