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Dollar tumbles as polls show Brexit risk subsiding

Pound coins are stacked in front of a twenty pound note.
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The dollar tumbled on Monday as sterling surged more than 2 percent and the euro jumped after opinion polls swung in favor of the campaign for Britain to stay in the European Union, boosting risk sentiment.

Investors reacted after three of six opinion polls published during the weekend showed a shift toward keeping Britain in the EU, with some citing the killing last week of pro-EU lawmaker Jo Cox as a factor.

The implied probability of a "remain" vote in Thursday's referendum rose to around 78 percent after falling as low as 60 percent last Thursday, according to odds from gambling website Betfair.

Riskier assets like stocks rose while traditional safe-havens like the Japanese yen, U.S. Treasuries and gold all fell in a reversal of the risk-off trading that has dominated markets for much of June.

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"From what we've seen in the market those are the Brexit trades and we've just seen a reversal of them after the seeming reversal or at least moderation in the polls for Britain leaving the European Union," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.

The dollar fell 0.6 percent against a basket of major currencies to 93.65, after hitting its lowest level since June 9.

Sterling earlier rose to a global session high of $1.4673, its highest in nearly three weeks, as it extended a recovery from Thursday's more than two-month trough of $1.4013.

The rise put sterling on track for its best one-day performance in seven years. It was last up 2.3 percent at $1.4687.

Brexit impact on stocks, bonds & commodities

The pound jumped 2 percent to 152.75 yen, pulling away from a three-year trough around 145.34 also set on Thursday. The euro fell 1.9 percent to 76.94 pence.

Indicating a general pick-up in risk appetite as Brexit worries eased, European shares and the U.S. S&P 500 both rose.

The yen fell across the board offering some relief for Japanese policymakers concerned about the currency's recent strength.

Bank of Japan Governor Haruhiko Kuroda on Monday acknowledged for the first time that the central bank had failed to hit its inflation target in the two-year time frame set in 2013, keeping alive chances for more stimulus in coming months.

The euro jumped 0.1 percent to 117.55 , well above Thursday's three-year low of 115.51. Against the dollar, the euro gained 0.28 percent to $1.1307.