EMERGING MARKETS-Strong dollar pressures Latam FX; stocks broadly lower ahead of Nvidia results

By Pranav Kashyap and Purvi Agarwal

May 28 (Reuters) - Most Latin American currencies weakened against a strengthening dollar on Wednesday, while investors awaited results from AI titan Nvidia, which could set the tone for equity markets.

MSCI's broad gauge for the region's currencies .MILA00000CUS fell 0.7% as the greenback =USD ticked up 0.4%, extending gains from the previous session.

Its counterpart for equities .MILA00000PUS eased 0.8%, retreating from a more than eight-month peak hit the previous session.

Heavyweight Brazilian stocks .BVSP lost 0.4%, weighed down by the nation's airline Azul AZUL4.SA tumbling as much as 13%, after it initiated Chapter 11 bankruptcy protection proceedings in the U.S. earlier in the day.

Brazil's equity gains on Tuesday were largely powered by data showing the country's inflation rate decelerated for the third consecutive reading, suggesting that the central bank's sustained efforts to keep interest rates at their highest in nearly two decades are beginning to yield results.

The real BRL= lost 0.9%, the most among peers.

Fresh GDP figures for the first quarter, due for release on Friday, may shed more light on Brazil's economic landscape, and help investors gauge if the monetary policy tightening cycle in the country has finally concluded.

"The inflation numbers yesterday were surprisingly soft. My money is on 2026 for the first cut but we have plenty of time from here to there," said Brad Bechtel, global head of FX at Jefferies.

The view was supported by economists at Itau Unibanco, Brazil's largest private lender.

Meanwhile, Mexico is on the cusp of its first-ever judicial elections this Sunday. Voters will cast ballots for federal judges and magistrate roles, a roster that includes all Supreme Court justice positions.

The Mexican peso MXN= still bears the scars of a market exodus triggered when President Claudia Sheinbaum, a key proponent of the judicial overhaul, secured her presidential victory in June 2024.

That same month was the most brutal for the peso since the COVID-19 pandemic in 2020, and ratings agency Moody's warned that the reforms could carry significant implications for the country's sovereign rating in September.

"While the judicial elections stand out for their complexity and unprecedented scope, markets seem relaxed about their implications," said analysts at UBS.

On the day, Mexican equities were slightly higher, just shy of the record high hit in the previous session.

Meanwhile, the peso weakened 0.8%. The central bank slashed its growth forecasts for the economy in 2025 and 2026, citing "sluggish" domestic activity and U.S. trade uncertainty.

Currencies in Colombia COP= and Chile CLP= slid 0.3% and 0.4% respectively, in line with broader market weakness.

Investor attention has pivoted to the quarterly results from AI bellwether Nvidia NVDA.O due after the U.S. market close.

Meanwhile, minutes from the Federal Reserve's last meeting showed that policymakers acknowledged risks of rising inflation and unemployment in the coming months, reiterating the central bank's data-dependency.

Elsewhere, El Salvador's international dollar bonds were little changed. The International Monetary Fund reached an agreement with the nation to disburse approximately $120 million, following the successful first review of an ongoing $1.4 billion, 40-month program.