OTTAWA — The Canadian dollar struggled to hang on to recent gains Thursday as oil prices slipped and one commentator warned the currency could be overvalued by as much as six cents U.S. The dollar closed at 98.65 cents U.S., following advances in all but one of the previous 14 sessions. On Wednesday, the loonie ended at 98.98 cents U.S., after posting an intraday high of 99.31 cents U.S.. A steady rollout of strong reports on the Canadian economy has propelled the loonie's march on parity with the U.S. dollar. Yet another report Thursday showed foreign investors plowing their money into Canadian assets, particularly federal government bonds, for the thirteenth straight month. BMO deputy chief economist Douglas Porter, described the move as "big." "We've heard all the reasons why the Canadian dollar is taking dead aim at parity in recent days. Today, we saw some of the mechanics behind how it's getting there. Foreign investors poured another $11.8 billion into Canadian securities in January," he said. "This brings the 12-month running total net inflow to a towering $111 billion, by far and away a record. To put this in perspective, $111 billion is more than seven per cent of Canadian GDP, it's nearly three times the size of last year's current account deficit ($41 billion), and it's larger than the budget deficits of Ottawa and all the 10 provinces combined. "With foreign investment on its own enough to easily fund all of Canada's government deficits, it's no wonder that the loonie is on a tear," Porter said. But on a day when commodity prices were slipping and equity markets were taking a breather, the dollar found itself temporarily adrift, and ripe for a correction, according to David Rosenberg, chief economist at Gluskin Sheff & Associates Inc. The dollar is overvalued by at least six cents, Rosenberg said in a note Thursday. He based his assessment on the Commitment of Traders report from the Chicago Mercantile Exchange, which shows traders have increased their net long position on the loonie fivefold in the past month to 62,123 contracts, the second highest on record. "The last time the net speculative longs on the loonie were this high was back in November 2007; the loonie went on to suffer a 9.5 per cent correction in the next month," Rosenberg wrote in a morning note Thursday. "We love the Canadian dollar on a secular long-term basis," Rosenberg wrote. "But at 99 cents we believe the loonie is overvalued by at least six cents (U.S.). The release of Canada's consumer price index for February was expected to set the tone of trading Friday, with upward pressure on the loonie if core inflation rate much exceeds the consensus estimate of 1.7 per cent annually, analysts said.

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