Rising tensions keeping investor demand for risk assets in check. Further losses on Wall Street also casting a shadow as investors continue to dump Internet stocks and switch into defensive sectors. Asian stocks steady overnight, but Japan's Nikkei bucking the trend, slumping over 1% after the Bank of Japan held policy steady. Bank of New York Mellon Chief Currency Strategist, Simon Derrick says the BoJ was right to leave policy unchanged, arguing tha the Yen will continue to benefit from a global retreat from risk.

SHOWS: LONDON, ENGLAND, UK (REUTERS- ACCESS ALL) (APRIL 08, 2014)

1. 'Let's talk about the Yen first. Does it actually matter that they've held steady, done nothing?'

DERRICK: 'In fairness in the currency environment, I'd say the answer is no because I think that the Yen as always is a classic measure of risk. And what we have right now is a clear retreat from risk in the face of geopolitical issues and in face of what people are increasingly thinking. It could be an overvalued tech market and of course as a result, people are piling back into the Yen. So I don't think it really would have mattered what the BOJ did overnight unless it had been a truly dramatic move. I think we got far bigger fish to fry.'

JOURNALIST: 'Yes, like Ukraine, Russia, and risk elsewhere as well. And what do you- what are investors concerned about? What are you hearing from your clients?'

DERRICK: 'Well, I think right now, the number one issue actually is really the bizarre performance of the Euro, to be quite honest. Here we are with a currency that remains rock solid at 1.37. Despite the fact that we have a Central Bank that's quite clearly worried about the strength of the currency and had seemed more than happy to start talking about using quantitative easing to actually fight against that. And yet, despite that and despite the past evidence, they even talk of QE for other currencies can drive them sharply lower. Here we have a Euro that's stuck rock solid at 1.3750.'

JOURNALIST: 'QE, big topic here in Europe as well. We've just had comments on Mersch. On the Mersch thing, ECB, should have QE primed in case and it's needed off the back of Draghi's comments. You know what, and he's saying there's no need for immediate action. Wh at-'

DERRICK: 'I think if you look at the two, I suspect they're actually aimed at slightly different things. I think they're humming QE primed ready for action coming from Mersch. I think that is really about, okay, should we have further currency strength, let's say we go through 1.40, which is entirely possible given the way we're currently performing and given actually a geopolitical risk perversely. Then, QE clearly should be ready. What he is probably talking about is the underlying inflationary story. I remember the story that's coming out right at the moment is, they think that inflation itself is actually stabilized.'

JOURNALIST: 'And just a quick question ahead of the Bank of England meeting on Thursday, we've got this BCC survey showing exports growing at its fastest rate ever. Is this going to change anything for Carney?'

DERRICK: 'I think it's highly unlikely. I mean, the number one thing the Bank of England wants to do now is keep this recovery going and any sign of any improvements in the export story is going to be deeply welcomed. They want to keep that going, they want to keep Sterling competitive. Why would you change policy now?'