Ex-president Lula was refused bail to fight a 12 year jail term for corruption this week. The courts told him to start serving his sentence.
Markets were happy with the news but they may have celebrated too soon.
Lula refused to turn himself in and is guarded by several hundred supporters around the union building he’s in.
At this stage it’s not easy to discern how this will unfold. Lula is very popular, a favourite in the upcoming elections, and he’s in union property.
There is a lot of discontent in Brazil and the president, Temer is deeply unpopular, there was a general strike only last year.
Any false step by the police to detain Lula could set off wider protests.
Any negative impacts would see the Real challenge 3.5000 area but a return to calm could see an eventual test of the 3.0000 area.
Always tough to predict political outcomes.