I got it to work like this:
<Grid>
<Canvas Height="261" HorizontalAlignment="Left" Name="canvas1" VerticalAlignment="Top" Width="140" Background="#FF6FB16F" />
<Canvas Height="261" HorizontalAlignment="Right" Name="canvas2" VerticalAlignment="Top" Width="139" Background="#FF70BE70" />
</Grid>
I just changed the Horizontal to Right instead of left and it works fine, as the canvas2 is pushed to the right as it gets smaller.