• The NY Fed Manufacturing Index rose unexpectedly to 31.90 in December. 
• The strong report was ignored due to a simultaneous release of weaker than expected US retail sales numbers. 
• FX markets are focused on the Fed policy announcement later in the session.   

The headline General Business Conditions Index of the NY Fed's Empire State Manufacturing Survey surprisingly rose to 31.90 in December, up from 30.90 in November. That was a beat on the market's median forecast for a decline to 25.00. 

Additional Takeaways as per the NY Fed's report:

"Business activity continued to grow strongly in New York State."

"The new orders index and shipments indexes were both little changed at 27.1, pointing to another month of strong growth in both areas."

"The index for number of employees came in at 21.4, indicating a solid increase in employment, and the average workweek index fell to 12.1, suggesting a modest increase in hours worked."

"The prices paid index edged down three points to 80.2, and the prices received index fell six points to 44.6, signaling ongoing substantial increases in both input prices and selling prices, though at a slightly slower pace than in November."

"Firms were generally optimistic about the six-month outlook, though optimism remained below levels seen in September and October. The index for future business conditions held steady at 36.4."

Market Reaction

The strong NY Fed survey result was largely negated, as far as FX markets are concerned anyway, by a weaker than expected November Retail Sales report. The DXY saw a slight dip as a result but remains close to session/recent highs in the 96.50 area as the Fed policy announcement looms.