* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Updates throughout)
By Elizabeth Howcroft
LONDON, Nov 4 (Reuters) - The dollar gave up most of its gains and riskier currencies recovered on Wednesday as investors waited for U.S. election results amid growing hopes that the worst of the volatility related to the event has passed.
President Donald Trump won in the key battleground states of Florida, Ohio and Texas but the contest will not be decided until a handful of states finish vote counts in the next hours or days. dollar =USD rose as much as 1.2% overnight to hit more than one-month highs versus its rivals as early results indicated a tight race, surprising many who had bet on a decisive win for Democrat Joe Biden. Riskier currencies such as the yuan CNH=D3 and Australian dollar AUD=D3 fell more than 1% each.
But during the European session, the greenback lost some ground, and riskier currencies recovered, with the yuan hitting a 13-day high, as investors unwound some of those extreme positions.
"We have not so far seen big risk-off moves so I would think that probably that's the template for how things will evolve here," said Jonathan Davies, head of currency strategy at UBS.
"So even if we're getting more indications that it's going to be drawn out, the experience so far is not suggesting that we're going to see huge FX volatility and huge dollar strength," he added.
John Goldie, an FX dealer at Argentex, said that the uncertainty about the result left markets in wait-and-see mode.
"Talking to clients, we had some expectations of some bigger moves in either direction," he said.
At 1239 GMT, the dollar was up around 0.2% on the day versus a basket of currencies =USD , while euro-dollar had flipped to positive on the day, up 0.1% at $1.17385 EUR=EBS .
Andreas Koenig, Amundi's head of global FX said that he had not changed his portfolio positions yet but would look to increase risk exposure once there was a clear outcome. He favours China's offshore yuan, the Canadian dollar and high-beta currencies such as the Mexican peso and Russia's rouble.
A Biden victory had been expected to boost prospects for a large U.S. fiscal aid package and lessen trade war tensions, causing the dollar to weaken sharply. It fell to a one-week low on Tuesday on expectations of a Biden win. uncertain election result heightens the risk of a contested outcome, which could include lengthy legal battles, prompting investors to seek safer assets.
But overnight volatility gauges for euro-dollar and dollar-yen fell. They had surged to their highest levels since March earlier this week EURONO= JPYONO= .
Market participants said that this was due to a lack of information, with investors not initiating new trades at this stage.
(For multimedia U.S. election coverage, click here https://www.reuters.com/world/us-election2020.)
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https://tmsnrt.rs/3jT5Gc1 USDCNH
https://tmsnrt.rs/2GpyY4j
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