* Canadian dollar rallies to highest level since Nov. 11
* Aftermath of Fed cut continues to weigh on greenback
* Bond yields near record lows after weak wholesale data
By Frank Pingue
TORONTO, Dec 17 (Reuters) - The Canadian dollar rose for the third straight session on Wednesday and hit a five-week high as the U.S. dollar was beaten down again a day after the Federal Reserve slashed interest rates.
Canadian bond prices finished higher on the long end of the curve, with yields stuck near record lows, mirroring action in the bigger U.S. Treasuries market and after data showed Canadian wholesale trade fell more than expected.
The Canadian dollar closed at C$1.1967 to the U.S. dollar, or 83.56 U.S. cents, up 0.4 percent from C$1.2018 to the U.S. dollar, or 83.21 U.S. cents, at Tuesday's close.
About 90 minutes before the Bank of Canada gave its closing figure for the Canadian currency it rallied to C$1.1935 to the U.S. dollar, or 83.79 U.S. cents, which was its highest level since Nov. 11.
The jump was not Canada-specific as the U.S. dollar tumbled against a slew of currencies including the euro and yen as Tuesday's Fed decision to cut rates more than economists expected continued to pull the rug from under the greenback.
"What we saw was just some continued gains based on what happened yesterday in terms of monetary policy in the U.S.," said George Davis, chief technical strategist at RBC Capital Markets.
Davis also said that while the bias remains to sell the U.S. dollar, the magnitude of its fall versus a number of currencies may have been exaggerated by light trading volumes.
Comments by Bank of Canada Governor Mark Carney, who said during a speech in Toronto that 2009 would be a challenge for many Canadians, did not have much impact on currency markets.
Carney said measures taken in Canada and around the world were working their way through the system and would pull the economy out of the financial crisis it is in.
"For the most I think the comments didn't really sort of generate any new information to the market," Davis said.
"He reiterated the fact that it looks like we are moving into a recession here in Canada and that next year is likely going to be a challenge, but those comments were pretty much as expected given what else is going on in the background."
Capping the Canadian dollar's rally was a drop in the price of oil, a key Canadian export, to its lowest level in more than four years.
Oil prices fell as the decision by the Organization of the Petroleum Exporting Countries to cut supply was considered by some as not enough to offset slumping world energy demand.
The Canadian dollar is up 6.2 percent this week so far.
BOND PRICES RISE
Canadian bond prices rallied on the long end of the curve and kept yields pinned near record lows as the latest Canadian data added to a growing string of reports that support the idea of a weaker economy.
The bond market was also largely influenced by the bigger U.S. Treasury market, which also rose on the long end due to ongoing demand for higher-yield investments following the Fed's interest rate cut.
Canadian data showed the value of wholesale trade fell by 1.8 percent in October from September, which was far worse than the unchanged growth expected by the market.
The next key Canadian economic data is October retail sales figures on Thursday followed by Friday's consumer prices report for November.
The two-year bond fell 1 Canadian cent to C$102.81 to yield 1.287 percent. The 10-year rallied 60 Canadian cents to C$111.30 to yield 2.875 percent.
The yield spread between the two-year and 10-year bond was at 175 basis points, up from 174 basis points at the previous close.
The 30-year bond jumped C$2.40 to C$125.90 to yield 3.547 percent. In the United States, the 30-year Treasury yielded 2.643 percent.