The loonie rose 0.21 of a cent to 98.78 cents US.
The U.S. Labor Department reported that weekly applications increased 28,000 to a seasonally adjusted 385,000. It was the third straight weekly increase as jobless insurance claims rose to the highest level since late November. The four-week average, a less volatile measure, rose to 354,250.
The U.S. government's March employment statistics come out Friday. Economists had been expecting the economy to have created about 190,000 jobs last month. But that figure was cast into doubt after payroll firm ADP said Wednesday that the private sector cranked out 158,000 jobs last month, which was below the 215,000 reading that markets had expected.
Other data released Thursday showed the number of Americans seeking unemployment insurance rose to a four-month high last week.
Traders also looked ahead to the release of Statistics Canada's March employment report on Friday.
The consensus calls for the economy to have created about 6,500 jobs.
Traders also took in comments from Atlanta Federal Reserve Bank president Dennis Lockhart, who said the U.S. Fed will not rule out tapering quantitative easing, known as QE3, and announcing an end date.
In an interview on CNBC, Lockhart said the tone on the U.S. economy is more optimistic than before.
And he acknowledged that the Fed recognizes there may be unintended consequences from the buildup on its balance sheet in relation to the stimulus program, which has involved the central bank printing money to buy up large amounts of bonds.
Meanwhile, Japan announced that it is making a sweeping shift in its monetary policy that aims to raise inflation and get the world’s third-largest economy out of a long slump.
The Bank of Japan said it intends to double the money supply and achieve a two per cent inflation target, with a time horizon of about two years.
The BOJ hopes to get corporations and consumers to begin spending more in a so-call virtuous cycle that would put growth back on track after two decades of malaise.
The June crude contract on the New York Mercantile Exchange declined $1.19 to US$93.26 after falling almost $3 on Wednesday as soft employment data and slower than expected expansion in the U.S. service sector raised doubts about the pace of the recovery.
Oil also plunged after the U.S. Energy Department said crude supplies grew by 2.7 million barrels to 388.6 million barrels in the week ended March 29. The U.S. supply of oil is now 7.2 per cent above year-earlier levels and the highest since July 27, 1990.
May copper was two cents higher at US$3.35 a pound following a five- cent slide Wednesday, while June gold bullion on the Nymex lost $1.10 to US$1,552.40 an ounce after losing almost $50 in the previous two sessions.