Anyone at all, because if I debit petty cash and credit exchange gain or loss I end up with a debit Canadian balance of $1952.78.

I really need to try and figure this out today.

This is how it looks, first column is foreign balance, second is debit and third is credit

Take a copy of your file and test this on a copy first.  I've never seen this issue before, only the reverse (no USD but a CAD balance).

Post a General Journal entry to add US$1000 to the Petty cash account and use the Exchange expense account for the credit side.  Use an Exchange rate of 1 so that CA$1000 is added to the account.

Then post a second General Journal entry to remove $2952.78 from the account.  Using the exchange rate of 0.33866 should give you the full CA$1000 credit to bring both the USD and CAD to zero.  Again use the Exchange expense account for the credit side.

You can look at the journal entry before you post so you can make sure the exchange rate you use on the second one will properly remove the CAD equivalent.  If it works, then do the exact same entries on your live file.