USD/JPY flat lines around 154.00, eyes on US Retail Sales release

• USD/JPY holds steady near 154.10 in Tuesday’s early Asian session. 
• The US Composite PMI rose to 56.6 in December’s flash estimate vs. 54.9 prior. 
• The BoJ is anticipated to keep the rate unchanged at its December meeting on Thursday. 

The USD/JPY pair trades flat around 154.10 during the early Asia session on Tuesday. Traders prefer to wait on the sidelines ahead of the Federal Reserve (Fed) and the BoJ interest rate decision later this week. On Tuesday, the US November Retail Sales will be published. 

The strong US economic data fails to boost the Greenback as the markets turn cautious ahead of the key events. Data released by S&P Global on Monday showed that the US Composite Purchasing Managers Index (PMI) rose to 56.6 in December’s flash estimate versus 54.9 prior. Meanwhile, the Services PMI improved to 58.5 in December’s flash estimate from 56.1. The Manufacturing PMI declined to 48.3 from 49.7. 

The Fed will make its next decision on interest rates on Wednesday, which is widely expected to cut rates by 25 basis points (bps). According to the CME FedWatch tool, markets are now almost fully pricing a 25 basis points (bps) cut at the Fed's December meeting, compared with about a 78% chance a week ago. Investors will closely monitor Fed Chair Jerome Powell's press conference and Summary of Economic Projections (dot-plot) after the meeting. 

On the other hand, the growing expectation that the Bank of Japan (BoJ) will keep rates steady at the December meeting on Thursday might weigh on the Japanese Yen (JPY). The markets are currently pricing in less than a 30% possibility of a rate hike in December. Several BoJ policymakers appear to be in no rush to tighten their monetary policy further with little risk of inflation overshooting despite Japan's still near-zero borrowing costs.