The pound was unchanged against the dollar at $1.2981 and up 0.15% against the euro at 1.1040 euros. In particular, July headline inflation came in at 0.1% month-month in July, falling short of expectations for CPI growth to stand at 0.2% - still this was better than June's 0.0%. Odds of a Fed rate rise during the December meeting now stand at around 40% according to the CME Group's 30-day Fed Fund futures prices.
Equities slid and the Swiss franc and some developed-market government bonds advanced as President Donald Trump threatened North Korea with "fire and fury" following a series of missile tests by the communist regime, boosting demand for haven assets.
US producer prices also fell unexpectedly during July. The S&P 500 added 3.11 points, or 0.1%, to 2441.32, ending the week down 1.4%, its biggest loss since March.
A spokesman for the Korean People's Army said in a statement that it was "carefully examining" plans for a missile attack on the U.S. Pacific territory, which has a large U.S. military base.
"We've had some competing forces play out over the past 12 hours - the U.S. dollar was stronger off economic data, but that was quickly reversed with President Trump's comments about North Korea earlier today (Wednesday)", said ANZ analyst Daniel Hynes.
"Military solutions are now fully in place, locked and loaded, should North Korea act unwisely".
While the conflict between the two countries remains a war of words markets are wary that the threat could escalate, in no small part to the unpredictability of the respective leaders, Trump and Kim Jong Un.
Data compiled by Bloomberg showed the division within the S&P 500, where companies with bond ratings below investment grade lost 3.4 percent on average, more than twice the 1.3 percent loss for higher-rated ones. Genesee & Wyoming (GWR) is posting a notable gain after reporting an increase in July traffic.
Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe posted its largest weekly drop since the week before Donald Trump won the United States presidential election in November.
Significant strength is also visible among computer hardware stocks, as reflected by the 1.1 percent advance by the NYSE Arca Computer Hardware Index.
Data storage company Seagate Technology (STX) is posting a standout gain within the hardware sector, climbing by 2.1 percent. During the 15 trading sessions, foreign investors net-bought local stocks for only three days. Asian and European stocks continued the sharp decline Friday.
The pan-European Stoxx 600 ended over 1% lower to a five-month low with nearly all sectors in negative territory.
Japanese markets were closed for a holiday.
The major European markets are also extending a recent move to the downside.
In Europe, France's CAC 40 fell 1.6 percent to 5,135 while Germany's DAX was down 1.3 percent at 12,133.
The yield on the benchmark 10-year Treasury note settled at 2.191%, its lowest close since June 26, compared with 2.211% Thursday and 2.269% last Friday.