(fxcue news) - The U.S. dollar suffered a setback in early New York session on Friday, and despite recovering from the lows, struggled to move any notably higher with investors awaiting the Federal Reserve's monetary policy announcement due next Wednesday. Although the Fed is widely expected to cut interest rate by 25 basis points next week, further reductions are likely to be only gradual. Recent data showing inflation remains sticky has led to worries the Fed will lower rates slower than previously anticipated next year. CME Group's FedWatch Tool is currently indicating a 97.1% chance the Fed will cut rates by a quarter point next week but an 81% chance the central bank will then leave rates unchanged in late January. In economic news today, data from the Labor Department said import prices in the U.S. unexpectedly edged higher in the month of November, edging up by 0.1%, matching the downwardly revised uptick in October. Economists had expected import prices to dip by 0.2% compared to the 0.3% increase originally reported for the previous month. Meanwhile, the report said export prices were unchanged in November after jumping by an upwardly revised 1% in October. Export prices were expected to slip by 0.2% compared to the 0.8% advance originally reported for the previous month. The dollar index, which dropped to 106.72, recovered to 106.97, up slightly from previous close. Against the Euro, the dollar weakened to 1.0502, and against Pound Sterling, it firmed to 1.2621 from 1.2672 after data showed a contraction in UK economic activity. The dollar gained against the Japanese currency, fetching 153.61 yen a unit, more than 0.6% up from Thursday's closing value of 152.64 yen. Against the Aussie, the dollar gained marginally at 0.6359. The Swiss franc eased a bit against the dollar at CHF 0.8926, while the Loonie weakened to 1.4237 against the dollar.