Thompson leads by three over Gerina Piller with another shot back to Taiwan’s Candie Kung and New Zealander and World Number One Lydia Ko.
2015 champion Minjee Lee heads the Australian contingent the West Australian in a share of 10th position and seven shots from Thompson’s lead.
2016 runner-up and Lee’s fellow Australian, Su Oh, moved to the edge of contention when she reached 7 under par for the tournament before a double bogey and bogey late in her round saw her sign for a round of 70 and at 4 under par she is in a share of 17th position.
Former winner Karrie Webb and Sarah Jane Smith are in 52nd position and will play the weekend.
Thompson’s love of this tournament which has seen her record three top tens including a runner-up finish in the last three years is perhaps the reason she is getting things back on track after a tumultuous six weeks since the ANA Inspiration where she was penalised four shots late on Sunday and eventually lost the event in a playoff.
“Yeah, it's just a tournament that I love to come back to,” said Thompson. “That always helps out, coming into tournament that you want to play well in and you always look forward to coming to this venue, it helps out with the positive attitude.”
Ko has thrown out signals that she is heading in the right direction once again after a slow start to the year - by her standards at least.
“Playing well on the real front nine (her back nine today) was good for confidence going into the weekend,” said Ko.
“I was hitting it a little better and hit a few more greens and obviously when you are hitting more greens in regulation you are giving yourself more opportunities.
“It has been a steady first two days but I like where I am. I’ve always liked this place and have stayed on the resort the last couple of years and it is always nice to walk out of your room and the 9th hole is right there.”