Diaz leads by three over New Zealander and world number two Lydia Ko and South African Lee-Anne Pace.
Diaz has been a long time away from the winner's circle and in fact has slipped to number 247 in the world although she is working out the balance between motherhood and professional golf.
"Knowing that I could manage being a mom and play. I think that's something I've struggled with, for, well eight years. When I only had one I think I got to a point where I was okay. I knew I was doing okay with it.
"But two you've got twice as much time to try and get everything done.
"I love being a mom. It's the greatest thing in the world, so I don't want to miss things. It's hard for me when I have to choose between the two.
The leading Australians are Lindsey Wright and Katherine Hull who are in a share of 8th position although six shots from the lead.
Sarah Jane Smith 46th and Julia Boland 67th are the only other Australians to have made the cut.