* Dollar recovers overnight losses
* Aussie, euro, yen little changed
* Bitcoin nears three-year high
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
LONDON, Nov 20 (Reuters) - The dollar edged up against a basket of currencies in early London trading, its downward trend was interrupted when U.S. Treasury Secretary Steven Mnuchin called an end to some of the Federal Reserve's pandemic lending.
Mnuchin's move re-appropriated some $455 billion allocated to the Treasury for other spending, but some investors were concerned about ending programmes that they think have played a vital role in reassuring markets. 10-year U.S Treasury yields fell to their lowest since Nov. 9 US10YT=RR . Fed also said it "would prefer that the full suite of emergency facilities established during the pandemic continue to serve their important role as a backstop," a rare open confrontation with the government.
The announcement curtailed optimism created by reports that Republican and Democratic Senators had agreed to resume talks on another coronavirus stimulus package. dollar index was at 92.335 at 0801 GMT, flat on the day after it slipped overnight then picked up again as European markets opened =USD . Analysts also cited rising COVID-19 cases as a reason for caution. do not see this dispute that has broken out between the US Treasury and the Federal Reserve as having much implication for the financial markets. For sure something like this is generally not good news at all but at the tail-end of an administration should mean the risk of actual harm to the real economy is limited," wrote MUFG head of research Derek Halpenny.
Halpenny also said that a possible lack of smooth transition between governments in Washington "creates additional uncertainty that only further reinforces the need for the Fed to fill the policy vacuum when it meets on 16th December", which will keep the U.S. dollar weaker.
Still, the dollar was down around 0.5% on the week, as currency market sentiment has been buoyed by U.S. President-elect Joe Biden's victory and the progress towards a COVID-19 vaccine. Australian dollar - seen as a liquid proxy for risk appetite - is having its best month versus the U.S. dollar since April, in terms of percentage change AUD=D3 .
The Japanese yen was down around 0.1% against the dollar, at 103.84 at 0824 GMT JPY=EBS .
The euro was flat against the dollar, at $1.18725 at 0825GMT EUR=EBS , on track for a small weekly gain.
"There is simply a lack of new impulses at present to let EUR-USD break out of the range of 1.16-1.19," wrote Commerzbank (DE:CBKG) strategist You-Na Park-Heger.
"Yes, there is still optimistic news regarding a possible vaccine, but the euphoria about that question has eased notably," she said, adding that the European Central Bank is expected to increase stimulus in December.
European Union leaders clashed on Thursday over Hungary and Poland vetoing the bloc's 1.8 trillion-euro ($2.14 trillion) recovery plan, but decided to allow more time for an agreement. The euro was unaffected. are inclined to think a common solution will be eventually found (in line with the prior examples of EU disputes) taking away the hurdle for more EUR/USD upside in 2021, and noting the wider soft USD environment," wrote ING strategists.
Elsewhere, Bitcoin came close to – but did not surpass – the Wednesday's three-year high of $18,483 BTC=BTSP . ($1 = 0.8425 euros)
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