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Halftime: 'Fast' Traders Best Plays on Yen Intervention

The US dollar rose against the yen on Wednesday as Japan intervened to weaken its currency for the first time in six years, kicking off what could be a sustained effort to limit yen strength.

Dealers said the Bank of Japan spent close to $20 billion to weaken the currency against the dollar, which staged its biggest daily gain against the yen in nearly two years. By mid-morning in New York, the dollar had climbed as high as 85.72 yen, up from a 15-year low beneath 83 yen.

While Japan's intervention impacted the market Wednesday, there is some doubt as to whether its effect will be long-lasting. In a note, Morgan Stanley said that because the country acted alone, the intervention might not be as effective. Peter Boockvar, an equity strategist at Miller Tabak & Co., agrees.

The most effective interventions of the 1980s were coordinated ones, said Boockvar. Japan's past unilateral efforts have not worked out well, he explained, like those in 2003 and 2004. Its central bank spent 35 trillion yen to weaken its currency, but in turn, the yen actually rallied by more than 10 percent.

Both Brian Kelly of Kanundrum Capital and Patty Edwards of Storehouse Partners agree with Boockvar's stance that based off past events, Japan's unilateral actions won't have a long-lasting effect on the yen.

Despite this history, Kelly would wait to short the currency because the Bank of Japan is very active. He said it won't be able to continue to hold the currency down, however, so he may short it in the future. Kelly did buy the iShares Barcalys 20+ Year Treasury Bond and iShares Barclays TIPS Bond exchange-traded funds because Japan is buying the dollar in mass.

The intervention creates a competitive currency devaluation, which could fuel inflation in the US because Japan is fighting deflation, Kelly said.

"This is a global race to deface your currency to improve your competitive position and the last man standing in that scenario is gold ," said Boockvar, a long-time bull on the precious metal, who added that it could go higher so long as central banks continue to intervene in the currency markets.

Joe Terranova, chief market strategist at Virtus Investment Partners, also recommends buying and holding gold. The yen had been a safe haven asset, he said, and this news might change that. Gold is one of the things that could replace the yen as a flight to safety.

Terranova added that he thought Toyota Motor would have performed better off of the yen news. If you are playing it on the short-side, he said, you can still be comfortable on that trade.

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Trader disclosure: On Sept. 15th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman’s firm owns (IBM); Finerman’s firm owns (ORCL); Finerman’s firm owns (HPQ); Finerman’s firm owns (JPM); Finerman’s firm owns (BAC); Finerman’s firm owns (BBY); Finerman’s firm owns (GLW); Seymour owns (AAPL); Seymour owns (MSFT); Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SWN), (SU), (SPLS), (RIG), (UPL); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (ARST) calls; Jon Najarian owns (CSCO) call spreads; Jon Najarian owns (RHT) call spreads

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (RIMM)
Accounts managed by Kanundrum Capital own (ALK)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital are short (OIH)
Accounts managed by Kanundrum Capital are short (IAI)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (BA)

For Tim Seymour
Seygem Asset Management owns (MSFT)
Seygem Asset Management is short (FCX)
Seygem Asset Management owns (BAC)
Seygem Asset Management owns (INTC)

For Patty Edwards
Edwards owns (PM) for clients
Edwards owns (KFT) for clients
Edwards owns (KMB) for clients
Edwards owns (TAL) for clients
Edwards owns (LEG) for clients
Edwards owns (WDFC) for clients
Edwards owns (JNK for clients
Edwards owns (LQD) for clients
Edwards owns (SPY) for clients
Edwards owns (VXX) for clients
Edwards owns (TIF) for clients
Edwards owns (JCG) for clients
Edwards owns (MSFT) for clients
Edwards owns (JPM) for clients
Edwards owns (C) for clients
Edwards owns (BAC) for clients
Edwards owns (HPQ) for clients
Edwards owns (CSCO) for clients
Edwards owns (INTC) for clients
Edwards owns (GLW) for clients
Edwards owns (V) for clients
Edwards owns (AEO) for clients
Edwards owns (SBUX) for client

For Lou Kerner
Wedbush Securities makes a market in (YHOO)

For Heather Bellini
ISI does and seeks to do business with (MSFT) and has received non-investment banking compensation in the past 12 months.

For Richard Bernstein
***No Disclosures***

For Pete Dawkins
***No Disclosures***

For Mike Khouw
***No Disclosures***

For Peter Boockvar
***No Disclosures***

For Carter Worth
***No Disclosures***


CNBC.com with wires.

Symbol
Price
 
Change
%Change
ISH BAR TIPS
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ISH BAR 20YTB
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7203.T
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