FOREX-Dollar consolidates losses after week-long drubbing

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Updates prices)

By Iain Withers

LONDON, Dec 18 (Reuters) - The dollar consolidated losses on Friday after a week of declines that pushed it to its lowest in two and a half years, as its slide sucked in more short sellers looking to make an easy buck.

The dollar index edged up 0.1% on the day to just short of 90, but remained on track for a fall of more than 1% over the week. It had reached its lowest in more than two years at 89.723 on Thursday.

Policy updates from central banks in the United States, Japan, Britain, Switzerland and Norway this week should do little to upend recent currency market trends and the long-term weakening of the U.S. dollar, analysts predicted.

"The announcements this week certainly reinforce the prospects of loose monetary conditions and favourable risk asset performance, which led by the Fed will keep the U.S. dollar on a weakening path," analysts at MUFG said in a note.

The Bank of Japan announced on Friday an extension of its COVID-19 loan programmes by six months and a surprise review of its policy to consider "further effective and substantive monetary easing", to conclude by March 2021.

The dollar rebounded as much as half a percent against the yen to 103.595 yen. It was last up 0.2%, but remains on track for a more than half a percent drop against the Japanese currency for the week.

The pound reversed some of its gains against the dollar and euro as knife-edge talks over a Brexit trade deal between the UK and European Union continued.

EU Brexit negotiator Michel Barnier said on Friday that "just a few hours" remained for negotiations to reach a trade deal with Britain, with the path to any deal "very narrow". British prime minister Boris Johnson said trade talks were "looking difficult" but the door for further negotiations remained open.

Bitcoin traded around $23,000, after rocketing to its highest-ever level on Thursday.

(Reporting by Iain Withers, Additional reporting by Tom Westbrook in Singapore; Editing by Chizu Nomiyama)