• JPMorgan’s measure of FX volatility tumbles to January low
  • SocGen and Saxo Bank warn price swings poised to pick up

It’s all quiet in currency markets, a little too quiet for some traders who warn that an uptick in volatility is just around the corner.

Price swings in global exchange rates slid to the lowest since January this week, according to a JPMorgan Chase & Co. index. A three-month measure of dollar volatility versus the euro tumbled to the least since December 2014 while a gauge against the yen fell to a two-month low.

That tranquility, which comes before holiday weekends in the U.S. and U.K., isn’t likely to persist. Event risk stemming from Britain’s vote on EU membership to Federal Reserve meetings to the U.S. presidential election threaten to roil currencies around the world. Increasing correlation between gauges of risk has meant that when one measure falls, others also tend to do so too, according to Kit Juckes, a London-based strategist at Societe Generale SA.

“There’s a very fine line for this calm period in markets that you see with low volatility, a slightly softer dollar and everything’s OK,” Juckes said in an interview on Bloomberg Television. “A bumpy summer seems to me to be quite a high risk still.”

JPMorgan’s gauge fell 0.86 percentage point this week, reaching the lowest level since Jan. 5. Three-month volatility in euro-dollar slid to 8.52 percent, while a similar measure of yen turbulence slipped to 10.1 percent.

June Looms

June is poised to be a big month for currency traders, with both the British referendum and a Fed policy meeting within days of each other.

The pound’s one-month volatility -- which captures the date of the U.K. vote -- jumped to its highest level since 2010 this week, providing a possible taste of things to come as the U.S. election in November approaches.

“With the most divisive U.S. presidential election in a generation fast approaching on the horizon, volatilities are likely to experience a mere summer lull at worst before picking up into the election,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark.

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