"Most investors will be completely out of their depth in making any assessment on the (North Korea) situation", said Koon Chow, emerging market FX strategist at fund manager UBP.
In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday.
The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the election.
Wall Street saw a stock sell-off on Thursday as rising tensions between the USA and North Korea filled investors with worry.
Trump, whose threat this week to bring "fire and fury" was dismissed by North Korea, said Thursday that statement might not have been "tough enough".
Shares of J.C. Penney (JCP) are moving sharply lower in pre-market trading after the department store operator reported a wider than expected second quarter loss despite better than expected revenues.
The Australian dollar, which rose to a 19-month high near 90.00 yen late in July, was down 0.6 per cent at 86.77 yen after slipping to a one-month low of 86.23 yen.
"It's just a classic risk-off day", said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY. While the German DAX Index closed just below the unchanged line, the U.K.'s FTSE 100 Index and the French CAC 40 Index both tumbled by 1.1 percent.
The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors there will repatriate funds should a crisis materialise.
The rhetoric between the US and North Korea has continued to heat up, leading traders to look to safe havens such as gold and treasuries. The US currency was down 0.3 per cent at 109.94 yen, following a retreat to 109.740, its weakest since June 15.
USA producer prices Thursday disappointed, as traders await consumer price inflation figures later Friday. Hong Kong's Hang Seng Index plunged by 2 percent, while South Korea's Kospi Index slumped by 1.7 percent.
Computer hardware stocks rebounded following recent weakness, with the NYSE Arca Computer Hardware Index climbing by 1.4 percent.
The Korean won also continued to fall, down 0.45 percent to 1,147.2. It soared over 2 percent in the previous two sessions, and is set for a weekly gain of 2.25 percent.
The strength in the sector came amid a jump in the price of gold.
The dollar weakened after news that US producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.
Markets are now awaiting U.S. consumer price data for July, due later in the session. Crude futures extended losses on the fear of slowing demand and lingering concern over a global oversupply.
US crude fell 0.41 percent to $48.39 per barrel and Brent was last at $51.68, down 0.42 percent on the day.