• Japan's Nikkei 225 dropped 2.45%, leading losses in Asia after three straight days of setting new closing highs and closing at 41,190.68.
• In contrast, Hong Kong Hang Seng index surged 2.55%, while Australia's S&P/ASX 200 set a new all time closing high.
• China's exports beat expectations, climbing 8.6% year on year in June as compared to expectations of an 8% rise forecasted by a Reuters poll of economists.

Japan's Nikkei 225 led losses in Asia on Friday, snapping a three-day winning streak and plunging over 2% after hitting a record high in the previous session.

Early Friday, the yen suddenly strengthened against the dollar after the U.S. inflation data release, prompting analysts and traders to suspect a possible intervention from the country's ministry of finance.

The yen traded at 158.55 against the U.S. dollar at roughly 12 a.m. Tokyo time after trading around 161.52 late Thursday.

The currency weakened again on Friday and was last at 159.21 against the dollar.

On Friday, Japan's top currency diplomat Masato Kanda said that authorities would take action as needed in the foreign exchange market.

Reuters also reported that Kanda said recent yen moves were somewhat rapid, but declined to comment on whether authorities had intervened in the currency.

The Nikkei dropped 2.45% to close at 41,190.68, while the broad-based Topix retreated 1.1% to end at 2,894.56.

South Korea's Kospi was down 1.18% at 2,857, while the small-cap Kosdaq slipped 0.24%, finishing at 850.37.

In contrast, Hong Kong Hang Seng index was up 2.7% as of its final hour of trade, while the mainland Chinese CSI 300 climbed 0.12% to ended at 3,472.4.

The losses come as China's exports beat expectations, climbing 8.6% year on year in June as compared to the 8% rise forecast in a Reuters poll of economists. This was also higher than the 7.6% rise seen in May. However, imports slipped 2.3% compared to June last year, compared with expectations of a 2.8% rise.

China's dollar-denominated trade surplus widened to $99.05 billion, higher than $82.62 billion in May and beating estimates of $85 billion.

Losses were also seen in Taiwan, with the Taiwan Weighted Index also falling almost 2% as heavyweights Taiwan Semiconductor Manufacturing Company and Foxconn — traded as Hon Hai Precision Industry — dropped more than 3% and 4%, respectively.

Australia's S&P/ASX 200 rose 0.8% to close at 7,959.3, setting a new all-time closing high.

Overnight in the U.S., markets fell even as inflation readings for June in the U.S. came in at the lowest level in about three years, giving the Federal Reserve room to lower rates.

The consumer price index rose at 3% year on year, a slower rise than the 3.3% in May.

Core inflation — which strips out food and energy costs, increased 0.1% monthly and 3.3% from a year ago, compared with respective forecasts for 0.2% and 3.4%.

The S&P 500 retreated from a record as investors rotated out of the big technology winners of the year, including Nvidia and Meta Platforms.

The broad market index fell 0.88%, retreating from a record it touched earlier in the session.

The Nasdaq Composite, which had also hit a record high earlier in the session, pulled back 1.95%, weighed down by a decline of more than 5% in Nvidia.

The Dow Jones Industrial Average added 0.08%.

—CNBC's Lisa Kailai Han and Brian Evans contributed to this report.