Question about Canadian exchange rate?

I'm confused. I'm good at math and all, but I'm still a little confused. So let me get this straight. I'll set up a scenario, you tell me if I'm correct. Lets say the exchange rate is 1.2%, and forget about foreign currency exchange fees. So, I have 100 dollars on my debit card, in USD. I go to Canada, and something costs 120, which is 100 USD. I can swipe my card and by the thing that costs 120 CAD, and it will only take out 100 USD. So I can technically use $20 free dollars because of the exchange rate, right? So if I have 1000 USD, I can spend, theoretically, 1200 CAD and not go over my limit? (excluding taxes and fee etc)