The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus, and it being the world's biggest creditor nation, there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty. Tokyo's Nikkei 225 tumbled 1.3 percent to 19,738.71 while Seoul's Kospi fell 1.1 percent to 2,368.39.
The Korean won KRW=KFTC also continued to skid, sliding 0.3 percent to 1,145 won to the dollar, after earlier sinking to its lowest level in a month. The consumer discretionary index was one of its biggest losers with a 0.47 percent drop.
Trump ratcheted up his rhetoric against North Korea and its leader yesterday, warning Pyongyang against attacking Guam or US allies after it disclosed plans to fire missiles over Japan to land near the US Pacific territory. Investors need more convincing over the possibility of higher U.S. interest rates this year and this should come in the form of rising inflation.
"Most certainly the market was hoping for some upbeat assessment from Fed Bill Dudley but it was Trump talk that trashed the equity markets, nothing more nothing less", said Oanda's Stephen Innes.
"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".
Asian equities fell, driving the region's benchmark index to its biggest loss in a month, on rising geopolitical risk after President Donald Trump warned the USA will retaliate against North Korea.
"When President Trump declared that the United States is "locked and loaded should North Korea act unwisely", investors became even more fearful".
"U.S. markets had previously been becalmed amidst the Goldilocks scenario of strong profit growth, low interest rates and full valuations".
The dollar was flat at 110.08 yen on Thursday, up from Wednesday's low of 109.56 yen, which was the dollar's lowest level since June 15.
And in bond markets, 10-year US Treasuries and Germany's ultra-safe government bonds, known as Bunds, were trading at their highest prices since June.
The technology sector was the S&P's biggest drag with a 2.2 percent drop.
Elsewhere, the New Zealand dollar NZD=D3 slid 0.9 percent to $0.7273.
Globally, gold rose 0.23 percent to United States dollars 1,288.70 an ounce in NY in Friday's trade.
Oil prices extended gains after rising nearly 1 percent overnight. Brent crude, used to price worldwide oils, gained 40 cents to $52.54 in London. They plunged 2 percent on Thursday on fears of slowing demand and lingering concerns over a global oversupply.
The RBNZ kept interest rates unchanged at a record low of 1.75 percent on Thursday.