By Anneken Tappe, MarketWatch

Central-bank decisions and an elections on the calendar for the week ahead

The dollar gained ground Monday as investors kept an eye on a number of themes, including Italy's budget and Britain's ongoing Brexit process.

The ICE U.S. Dollar Index was up 0.3% at 96.001, adding to a 0.5% weekly gain last week, according to FactSet data.

In the U.K., traders were watching Prime Minister Theresa May updating members of parliament on Brexit after earlier saying 95% of the deal was done. The U.K. leader said the real sticking point remained Northern Ireland, and stressed with regards to a possible extension of the transition period that this wasn't a desirable option and might not be necessary.

The British pound slipped on Monday, holding at a three-week low of $1.2973 for most of the session, down from $1.3066 late Friday.

The week ahead features several central bank decisions, including the Bank of Canada, which is expected to raise interest rates by 25 basis points on Wednesday. Sweden's Riksbank and Norway's Norges bank are also meeting Wednesday, ahead of the European Central Bank on Thursday. Investors will be watching for further details as the ECB moves closer to winding down its asset purchases in December.

In other European affairs, Italy was set to push ahead with a budget proposal (https://www.wsj.com/articles/italy-vows-to-stick-to-budget-that-breaches-eu-rules-1540207398) that would breach European Union budget guidelines. Brussels could penalize the country in response. Investors have been fretting over the future of Rome-Brussels relations, also because Italy is the eurozone's third-largest economy.

On Friday, ratings agency Moody's downgraded Italy's sovereign debt (http://www.marketwatch.com/story/moodys-cuts-italys-credit-rating-one-notch-stable-outlook-2018-10-19) to Baa3, leaving it one notch above junk, but said the outlook was stable, meaning another downgrade was unlikely soon. Italian bonds rallied, pulling down yields (http://www.marketwatch.com/story/treasury-yields-edge-lower-as-global-stock-markets-rebound-2018-10-22).

"With the Italian government bracing for the EU to reject its 2019 budget on Tuesday, the euro is likely to take a hit. Uncertainty in Italy remains one the major geopolitical factors weighing on global sentiment and denting investor confidence," said Lukman Otunuga, research analyst at FXTM, in a note.

The euro was slightly weaker, buying $1.1470 versus $1.1514 late Friday in New York.

In Asia, Chinese President Xi Jinping stressed his support for the private sector, which pushed local stocks higher (http://www.marketwatch.com/story/big-stock-rally-in-china-bolsters-markets-across-asia-2018-10-21). Xi's remarks came on the coattails of supportive words from the head of the People's Bank of China, which spurred a rally in Asian equities on Friday.

Read:Why investors are growing increasingly anxious about China (http://www.marketwatch.com/story/heres-why-investors-are-anxious-about-chinas-next-move-2018-10-18)

The yuan was slightly weaker against the buck, and one dollar bought 6.9474 yuan in Beijing and 6.9484 yuan in the offshore market.

On the weekend, Brazil is going to the polls for the second round of its presidential election (http://www.marketwatch.com/story/far-right-candidate-leads-brazils-polls-as-investors-worry-about-reforms-ailing-real-2018-09-20) to decide between right-leaning Jair Bolsonaro and Fernando Haddad, who is supported by Luiz Inácio Lula da Silva, the jailed but still popular former president.

Brazil's real reversed earlier losses against the dollar and gained steam as the session went on. The dollar was dragged to its lowest real level since late May, and last bought 3.6907 real, down from 3.7103 real Friday.

(END) Dow Jones Newswires

October 22, 2018 16:20 ET (20:20 GMT)