The Canadian dollar climbed above the $1.02 US level for the first time in seven months on Friday as the currency continued to rally following the Bank of Canada's recent shift to a more hawkish tone and U.S. GDP figures disappointed the markets.

The loonie traded as high as $1.0204 before easing back to close at $1.0194, a gain of 3/10ths of a cent from Thursday's close.

Data from the Bank of Canada show that the last time the loonie topped $1.02 was September 16, 2011.

Currency analysts say the loonie has broken its three-month trading range.

"Momentum is behind this move, which implies that we will still see a new high in [the Canadian dollar] in the near-term," said Scotiabank currency strategist Camilla Sutton in emailed comments to CBCNews.ca.

"The strength has been on a combination of events, the most significant was the recent shift to a hawkish bias by the Bank of Canada, making our central bank the only one of the G10 with a hawkish stance," she wrote.

Rate hike hints

Last week, the Bank of Canada mused in comments that accompanied its scheduled interest rate announcement that higher interest rates "may become appropriate" because the economy was improving and inflation was ahead of its expectations.

At the same time, Sutton also notes that U.S. Federal Reserve Chairman Ben Bernanke has "maintained his dovish tone."

The U.S. dollar retreated against a broad basket of currencies on Friday after GDP figures showed U.S. economic growth slowed in the first quarter to an annualized rate of 2.2 per cent. Analysts had expected growth of 2.7 per cent.

Gains in many commodity prices can also help to drive the Canadian dollar higher as many traders view the Canadian dollar as a commodity currency. Crude oil futures were up 35 cents to $104.90 US a barrel. Gold, silver, copper and natural gas futures also moved higher.

The highest the loonie has ever reached vis-a-vis the U.S. greenback was $1.1030 US during intraday trading on Nov. 7, 2007.