Real at threat as unemployment breaks reaches 5 year high

The gloomy outlook continues in Brazil. Unemployment in Latin America's largest economy has rose to 5 year high as it reached 6.7% in May.

Unemployment rose for fifth consecutive month and up from 6.4% in April, beating the forecast, which was at 6.6%.

The rise in unemployment is of extra concern. Companies tend to hold on layoffs since it is a very costly affair. This clearly means that companies are not at all positive on the future which could make them hold off costly layoffs.

• As a net result, Brazilian Real is likely to lose further against dollar as outlook remains gloomy. Brazilian economy is likely to remain weak as commodity prices such as sugar, coffee remains depressed.
  
  
• Lower oil price, has halted investments and construction in energy sector.
  
  
• Government need to pursue tough reforms to balance the budget amid slowdown.
  
  
• Scandal in state owned oil giant Petrobras has raised possibility of political turmoil in the country.

USD/BRL is currently trading at 3.08, support lies around 2.8, while resistance at 3.3.