Even if the canal zone weren't, both his parents were US citizens. That makes him a US citizen by birth regardless of where that birth takes place. The Constitution only requires being a "natural born citizen" not being born in US territory. It also requires a minimum of 14 years US residency and attainment of an age of at least 35 years.
No person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty-five Years, and been fourteen Years a Resident within the United States.
Absolutely true.