A.M. Observations

Index futures were largely sideways through last night despite the USD/JPY regaining the $102 level shortly after last night's post, it looks like it's close to losing the overnight gains which were a result of BOJ policy.

The Bank of Japan left their QE program unchanged, but they doubled the size of the Stimulating Bank Lending Facility and the Growth Supporting Funding Facility as well as extended the application period from both an extra year to 4 years from the previous 1-3 years, which allows Japanese banks to borrow at a fixed rate of 0.1%.

The problem, even though the Nikkei gained +3% was that this was already priced in to the BOJ's monetary base/QE program, thus the pair looks like it could lose $102 almost anytime and thus the reason US Index futures (nor European markets) benefitted from what is essentially a known factor.

Also in Asia the PBoC conducted its first liquidity withdrawing repo in 8 months with $48bn yuan of 14-day repos.

In Europe the ZEW Investor Confidence Index fell to 55.7 on consensus of 61.5 on concerns over the U.S. economy which seem to be right on as the Empire Manufacturing Index fell this morning from January to February at the fastest rate in 18 months with February being the biggest miss to consensus in 3 months.As far as pre-market indications, there was an intraday 1 min ES positive divergence around this morning's lows at 6:30 in ES, but it's 1 min.  The 5 min Index charts are still negative and the reason I think the USD/JPY may not hold $102 is because of the 3C charts, but everything gets wild in a few minutes.