Three-time major winner Lee fired a second-round 67 on Friday in Mississauga, Ontario and would have been alone in second place if not for her only bogey of the day, coming at the 18th hole. 

The 29-year-old won the KPMG Women's PGA Championship back in June and is in the hunt for her second title of the season.

"I think you feel like you need to keep the lead more than when you're chasing. You can kind of be a little more aggressive and you're trying to obviously chase and make as many birdies as possible," Lee said. 

"So I do think there is a little bit of a different mindset there."

Fellow Aussie Grace Kim is in a share of 21st place at two-under after rounds of 71 and 69.

Of the other Australians to make the weekend, Gabriela Ruffels (70, 72) is even with the card, while Cassie Porter (71, 72) and Robyn Choi (73, 70) are both one-over. 

However, compatriots Hannah Green, Steph Kyriacou and Hira Naveed all missed the cut.

Meanwhile, three shots ahead of Lee is Iwai, who is halfway to her second victory in as many weeks.

Iwai followed her bogey-free 64 in the opening round with a two-under-par 69 on Friday to climb to nine-under (133).

The 23-year-old won the Standard Portland Classic last week at a whopping 24-under. Being in front of the pack didn't change anything about Iwai's mental approach.

"No change in mindset. No change in swing," Iwai said. "Yeah, just focussing on my golf."

The biggest difference for Iwai was on the greens. She made four birdies compared to seven on Thursday and felt she left some opportunities out there.

"Today also I had many birdie chances, but I just didn't [make as many]," Iwai said. "I would say I left many short putts. Yeah, that's why tomorrow I need more."

Tied with Lee in second place at six-under are world No.1 Jeeno Thitikul of Thailand and Ireland's Leona Maguire.

Thitikul shot a 70, as did Maguire, who had a busy day with five birdies and five bogeys scattered on her card.

Brooke M. Henderson is the low Canadian at her national open after posting the score of the day, a five-under 66, to get her to five-under for the week. She went birdie-birdie to finish her round.

"I'm really happy with how that went, especially closing with four birdies in my last nine holes," said Henderson, who won this tournament in 2018.

She is tied for fifth with Linnea Strom of Sweden (67), Jenny Bae (69) and Megan Khang (71). 

Nelly Korda (69) is part of a group at four-under.

Aphrodite Deng, a 15-year-old amateur from Canada, easily made the cut at three-under.