US President Donald Trump recently slashed tariffs on China to 35 per cent from a whopping 145 per cent, prompting Beijing to lower its own tariff wall and triggering a rebound in values for riskier assets such as shares.
Following strong labour market data released on Thursday, the market now predicts three rate cuts by year's end, down from four priced in at the start of the week.
But traders are still nearly fully priced in for a 25 basis point cut to the cash rate, which sits at 4.1 per cent, on Tuesday.
Almost nine in 10 economists agreed in a survey by comparison website Finder.
Oxford Economics Australia's Sean Langcake is among the vast majority of the 41 economists surveyed who predict a cash rate reduction.
Despite better news on the tariff front, the economy would still be negatively impacted by the "uncertainty shock", he said.
"With upside inflation risks dissipating, the RBA can afford to lend the economy some more support," Mr Langcake added.
Economists at all four big banks also expect a cut, with NAB still holding onto its prediction of a turbocharged 50 basis point cut.
Nomura analysts Andrew Ticehurst and David Seif said the case for an "aggressive" 50-point cut was relatively weak, given the detente in the Sino-American trade war.
"We expect the RBA to deliver a 25 basis point rate cut, reflecting both further welcome progress in returning core inflation back towards target and the continuing highly uncertain global backdrop," the pair said.
The central bank will also update its quarterly economic predictions on Tuesday in an otherwise quiet week on the data front.
The Victorian government will unveil its budget on the same day, with ratings agency S&P Global warning the nation's most indebted state to rein in spending or risk seeing its AA credit rating downgraded further.
Meanwhile, US markets were buoyed by the tariff reprieve, rising for their fifth day in a row by the end of the week.
Australian shares reached a three-month high on Friday after eight straight sessions of gains.
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