The Australian dollar, which rose to a 19-month high near 90 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.
In Asia, the Japanese Nikkei 225 index closed down 0.1% on Friday.
At the moment stock falls have not been too dramatic - the bluechip index is at a higher level than it was a week ago.
Simmering tensions with North Korea were also weighing on the market in early trading Thursday.
The Dow Jones industrial average lost 204 points, or 0.9 percent, to 21,844.
In his latest warning to North Korea, US President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".
The US military's options are "locked and loaded", Trump said on Friday in a warning to North Korea if it made a decision to "act unwisely". Pyongyang said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base. The consumer discretionary index .SPLRCD was one of its biggest losers with a 0.47 per cent drop.
The increased geopolitical tensions this week, centred on the Korean peninsula and the nearby U.S. territory of Guam, have caused stock markets around the world to fall back as investors turn cautious. "If you look at the gold price after the CPI (inflation) data, it tells you that the Fed is not going to be in any rush to increase the interest rate this year", said Naeem Aslam, chief market analyst at Think Markets. Hong Kong's Hang Seng dipped 1.1 percent to 27,444.00.More news: Donald Trump appears to grant China banks sanctions reprieve after UN deal
More news: Can US Attack North Korea and Claim 'Self Defense'?
More news: Carragher expects Conte to leave Chelsea in next 12 months
"The war of words between the leaders of the US and North Korea continues to dominate investor sentiment", said Forex.com technical analyst Fawad Razaqzada.
FED WATCH: As well as monitoring the geopolitical backdrop, investors are looking ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed's outlook on the economy. In three days. the Nasdaq has lost 2.6% - the most since last September.
The dollar index (.DXY), which measures the US currency against a basket of other major currencies, fell 0.14 percent.
If the North Korean regime "does anything" to the U.S. or a United States ally "things will happen to them like they never thought possible", he told reporters on Thursday, according to Bloomberg. Still, he said, "the Washington, D.C., bedlam and North Korea's saber-rattling is muddying the broader landscape".
Crude oil prices tumbled on the back of the selloff on Wall Street and lingering concerns over global oversupply.
ENERGY: Benchmark U.S. crude gained 28 cents to $49.84 a barrel in electronic trading on the New York Mercantile Exchange.
South Korea's KOSPI fell 1.4 percent, taking its losses this week to almost 3 percent.
It had retreated to trade nearly flat on the day at 109.17 yen per dollar by 0711 GMT but was still 0.2 percent stronger against the euro at 128.28 yen.