By David George-Cosh OF DOW JONES NEWSWIRES TORONTO (Dow Jones)--The Canadian dollar moved lower Thursday morning, erasing gains made in overnight trading, after U.S. weekly jobless claims missed market expectations. The U.S. dollar was at C$0.9934 early Thursday after briefly touching an intraday high of C$0.9941, from C$0.9912 late Wednesday, according to data provider CQG. U.S. jobless claims fell by 2,000 to 386,000 in the latest week, missing expectations of a decline to 370,000. The four-week moving average of initial jobless claims rose by 5,500 to a seasonally adjusted 374,750, the highest level since Jan. 28. The worse-than-expected numbers follow a weak monthly nonfarm payroll data for March and might help spur further easing from the Federal Reserve, leading to the U.S. dollar weakening against the yen after the data was released. "That isn't good news, but it doesn't suggest a complete collapse of the labor market either," said Krishen Rangasamy, senior economist at National Bank Financial, noting that since jobless claims have been in decline in 2009, there have been several "temporary bumps" along the way. While the Canadian dollar has strengthened earlier in the week from the Bank of Canada's shift to a more hawkish stance, it remains within its 11-week, 210-point range. There are no Canadian data scheduled for Thursday, leaving the loonie to trade mainly on external headlines as well as market anticipation ahead of the domestic consumer price index on Friday, where annual headline inflation is expected to drop to 2.0% in March from 2.6% in February. "That may well deflate the Bank of Canada's rate expectations somewhat and squeeze short USD/CAD positions that have built up this week," TD Securities said in a note to clients on Thursday. -David George-Cosh, Dow Jones Newswires; 416-306-2017; david.george-cosh@dowjones.com

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