The Canadian dollar continued its steady recent climb against the U.S. dollar Monday, hitting its highest level in a year.

The loonie traded as high as $1.0251 US in morning trading, up almost 3/10ths of a cent from Friday's close. Bank of Canada data say this was the currency's highest level vis-a-vis the American dollar since Sept. 1, 2011.

Later in the day, the loonie slipped back and closed at $1.0230 US, up 7/100ths of a cent.

Currency analysts say the likelihood of further stimulus measures from the U.S. Federal Reserve, combined with the likelihood that the Bank of Canada will start raising its key interest rate much earlier than the U.S., is giving the Canadian dollar much of its relative strength.

Bloomberg reported that the Canadian dollar rose against 13 of the 16 most-traded currencies it tracks after the Bank of Canada reiterated last week that an increase in interest rates "may become appropriate."

"To be sure, Canada’s solid economic underpinnings, elevated commodity prices, and growing expectations that the [Bank of Canada] policy rate will be boosted in 2013 were behind the rise in the Canadian dollar beyond parity with its U.S. counterpart," said a research note Monday from RBC Economics.

RBC and many other currency watchers now don't expect a similar increase in the U.S. overnight rate until 2015.

Loonie seen heading to $1.03 US

Camilla Sutton, chief currency strategist with Scotia Capital, cites the "still hawkish Bank of Canada and a dovish Fed" as the dominant themes behind the loonie's strength.

"In the near-term I would not be surprised to see CAD touch $1.03," she wrote in emailed comments. "However, I would suggest the strength stalls out from there."

Sutton say there are limits to how high the loonie can go "while there is the overall looming threat of a global economic slowdown."

Scotia Capital's currency analysts see the Canadian dollar ending this year at $1.01 US, rising to $1.03 US by the end of 2013.

In the short term, the high-flying loonie is expected to provide even more incentive for Canadians to head to border U.S. cities to do their shopping.

Recent figures from Statistics Canada show that one-day car trips to the U.S. are at all-time highs, although some of that increase may be due to the boost in duty-free exemption levels that kicked in on June 1.