* Canadian dollar bounces to 93.55 U.S. cents
* U.S. payrolls fall in Jan, jobless rate at 5-month low
* Canada adds 43,000 jobs, unemployment rate dips
* Bond prices lower across the curve (Recasts on U.S. jobs data, adds quotes)
By Claire Sibonney
TORONTO, Feb 5 (Reuters) - The Canadian dollar shot higher against the U.S. currency on Friday, as U.S. equities bounced and investors took profits from a recent rally in the greenback following fairly positive U.S. jobs data.
U.S. payrolls unexpectedly fell in January, but the unemployment rate surprisingly dropped to a five-month low, hinting at labor market improvement. [ID:nN04115255]
It was good news for Canada, too, with the economy adding a surprising 43,000 jobs in January, while the unemployment rate fell to 8.3 percent from 8.4 percent, according to Statistics Canada data on Friday. [ID:nN05253705]
The Canadian dollar initially turned slightly lower after the U.S. data was released, a knee-jerk reaction to the weak headline number.
"When they started to look at the improved unemployment print and dig into the revisions that's when we started to see things reverse a little bit." said George Davis, chief technical strategist for RBC Capital Markets.
"The main trigger point was we started to see equity markets bounce off of their lows so that kind of helped the Canadian dollar given the positive correlation between the two."
The Canadian dollar jumped to C$1.0690 to the U.S. dollar, or 93.55 U.S. cents, from C$1.0749, or 93.03 U.S. cents just before the Canadian jobs report.
On Thursday, the Canadian currency closed at C$1.0727, or 93.22 U.S. cents. It touched a three-month low of C$1.0781 in the overnight session.
As investors regained some risk appetite, Canadian government bond prices turned lower across the curve following the U.S. jobs data.
"If we continue to see the equity markets bounce, we should see bond prices stay under pressure and bond yields nudge higher," said Davis.
The two-year bond CA2YT=RR was down 5 Canadian cents at C$100.43 to yield 1.287 percent, while the 10-year bond CA10YT=RR was down 50 Canadian cents at C$103.00 to yield 3.372 percent. (Reporting by Claire Sibonney; Editing by Jeffrey Hodgson)