But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen.
The dollar widened losses against the yen to hit a two-month low.
Despite the risk-off attitude in the market, stocks in NY were taking back some losses at the London equities close, as bargain hunters entered the market following steep falls in U.S. stock indices earlier this week.
"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".
Emerging market stocks lost 1.28 percent.
The data comes amid tepid inflation that has remained below the Federal Reserve's 2 percent target, despite low unemployment.
The dollar index, which gauges the greenback against the currencies of six major USA trading partners, was last 0.2% down on the day during afternoon European trading hours - it stood at 93.20.
The Swiss and the yen are often sought in times of geopolitical tension partly because both countries have big current account surpluses.
"The market is trying to interpret the CPI data as somewhat positive because it is anticipating that the Fed will be on hold not only in September but also possibly in December", said Robert Pavlik, chief market strategist at Boston Private Wealth.
Traders took heart in a measure of US consumer prices that increased only slightly in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.
Weakness in U.S. Treasury yields may also be supporting the yen, Sweeting said.
In a note sent to clients late on Thursday, the USA bank predicted the single currency would rise to $1.25 in the first quarter of next year and reach parity with sterling for the first time. 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.
Crude futures extended losses on fears of slowing demand and lingering concerns over a global oversupply.
In commodities, US. crude fell 0.67 per cent to $49.23 per barrel and Brent was last at $52.58, down 0.23 per cent on the day.
The dollar was down 1.2 percent at 0.9627 Swiss francs, while an ounce of gold was 1 percent higher at $1,275.
While some investors anxious about the growing tension between the U.S. and North Korea have been busy driving up the price of gold, deVere Group strategist Tom Elliott has another idea: make sure your investments "remain diversified".