Fellow Australians Brad Lamb and Nick O'Hern were tied for third, four shots behind Allenby. Lamb and O'Hern each had 2-under 70s on the par-72, 6,996-yard Huntingdale course, which put them at 138 overall.
Rich Beem, the 2002 PGA Championship winner, and two-time Australian Open champion Aaron Baddeley missed the cut of 2-over 144.
Beem, entered in next week's Australian PGA at Coolum, had a 76 after an opening 74 for a 6-over 150. Baddeley's 77 on Friday left him with 149.
Allenby, who has the flu, had an up-and-down round, including three bogeys, six birdies and an eagle in a round that took longer than five hours.
'The only thing I know for sure is that I'm sick,' Allenby said. 'By the 13th hole, I was pretty much worn out.'
Allenby played in the Presidents Cup two weeks ago and the Nedbank Challenge invitational last weekend, both in South Africa.
'I guess that's what happens when you're not 100 percent,' he added. 'You don't expect too much and most of the time you play pretty good.'
Senior added a 3-under 69 to his opening 67 to be alone in second place at eight-under. He shot a pair of birdies at the par-5 sixth and seventh and another two at 13 and 17, to go along with a bogey at the par-3 15th.
'I'm confident about the way I'm playing,' Senior said. 'I'm putting well, and you never forget how to win.'
Defending champion Peter Lonard was tied with Jarrod Moseley for fifth at 5-under.
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