How To Play The Bank Of Japan Intervention (FXY, EWJ)

It looks like the Bank of Japan may currently be intervening in the currency markets, as the yen/dollar has jumped significantly in the past few minutes and the stock market averages are well off their lows for the day. The ratio is now 84.02/dollar, well above the 83.90 ratio we saw earlier. To profit from this, investors may want to look at a pairs trade here. I suggest traders may want to short CurrencyShares Japanese Yen Trust (NYSE: FXY) and subsequently go long iShares MSCI Japan Index ETF (NYSE: EWJ). The Japanese Yen Trust ETF tracks the price of the yen. As the yen rises due to risk aversion, the share price of this ETF rises…