The yen held steady near a 12-week high against the dollar on Friday, while equity markets in the Asia-Pacific region remained subdued following their worst performance since mid-April.

Regional stocks mirrored the losses seen on Wall Street, where both the S&P 500 and the tech-heavy Nasdaq continued their declines after Wednesday's hectic trading session.

On Friday, MSCI's broadest index of Asia-Pacific shares fell by 0.55%, extending the 1.88% drop from the previous day.

Conversely, some markets experienced rebounds, with Hong Kong's Hang Seng index rising by 0.74% and Australia's benchmark adding 0.85%.

U.S. stock futures pointed to a higher open, with S&P 500 futures up 0.36% and Nasdaq futures advancing 0.45%. Overnight U.S. economic data provided some optimism, with second-quarter growth surpassing expectations and inflation easing. This helped alleviate concerns of a potential abrupt end to the economic expansion and supported expectations for a Federal Reserve interest rate cut in September.

Kyle Rodda, a senior market analyst at Capital.com, noted that the release of the PCE deflator on Friday would be "the next test, and arguably climax to the week's trade." Rodda expressed concerns about potential upside risks to the current consensus estimate for the PCE Index. "A modest upside surprise could impact the expected timing and number of Fed rate cuts over the next six months, potentially unsettling markets already exhibiting cautious sentiment."

In the currency markets, the yen's safe-haven demand eased overnight, with long-held bearish positions unwinding as the Japanese currency gained 2.4% this week against the dollar, marking its best performance since late April. The dollar traded 0.28% lower at 153.525 yen, after dipping to 151.945 on Thursday, its lowest since May 3, before rebounding by the end of the day.

IG analyst Tony Sycamore remarked that the 152-151.80 yen range has proven to be a strong support level. "We continue to expect this support level to hold, with a potential squeeze back towards 155.30 before Wednesday's Bank of Japan meeting," Sycamore said. "After that, the outlook becomes uncertain."

The Bank of Japan and the Federal Reserve are set to announce their policy decisions on July 31. The rate futures market now reflects a 67.2% chance that the BOJ will raise rates by 10 basis points next week, up from a 40% chance earlier in the week, according to LSEG estimates. Conversely, markets assign only a slight probability to a Fed rate cut next week but are fully anticipating a reduction in September, as per CME's FedWatch Tool.

In the bond markets, U.S. two-year Treasury yields eased slightly to 4.4389% during Asian trading hours, though they remained above the overnight low of 4.34%, a level last seen in early February. The 10-year yield was slightly down at 4.2466%.

Elsewhere, the euro rose 0.11% to $1.0857, while sterling gained 0.1% to $1.2863. Oil prices edged up as stronger-than-expected U.S. economic data raised expectations for increased crude demand from the world's largest energy consumer. Brent crude futures for September increased by 7 cents to $82.44 a barrel, and U.S. West Texas Intermediate crude for September rose by 4 cents to $78.32 per barrel.