Both.
And some sell in euros or in Australian dollars.
When you list on dot CA, you list in loonies, and have a full spectrum of postal (and other) shipping services, including a choice of Flat Rate or Calculated Shipping*.
When you list on dotCOM, you list in US dollars, but your Managed Payments will make those into loonies before depositing into your bank account.
Ditto - euros, rimibi, yen, pesos, etc.
You can when setting up your Managed Payments, choose a Canadian bank account held in US dollars, if you believe most of your sales will be to the US and if you are mostly listing on dotCOM.
*Use Calculated for anything that must be tracked, or for overseas.