• NY Fed Empire State Manufacturing Index fell sharply in August.
• US Dollar Index erased a portion of its daily gains after the data. 

The headline General Business Conditions Index of the Federal Reserve Bank of New York's Empire State Manufacturing survey declined to -31.3 in August from 11.1 in July. This reading missed the market expectation of 8.5 by a wide margin.

"New orders and shipments plunged, and unfilled orders declined. Delivery times held steady for the first time in nearly two years, and inventories edged higher," the New York Fed further explained in its publication. "Labor market indicators pointed to a small increase in employment, but a decline in the average workweek."

Regarding inflation, while still elevated, the prices paid index moved lower and the prices received index held steady, the NY Fed added and noted that firms did not expect much improvement in business conditions over the next six months.

Market reaction

The US Dollar Index (DXY) turned south and erased a portion of its daily gains after this data. As of writing, the DXY was still up 0.4% on the day at 106.10.