But more so than the competition, it is the 36-year-old Federer's dominant play at this month's Hopman Cup, where he won all four of his singles matches and led Switzerland to a third title, that gives him the edge.
"He looks younger than ever," ESPN tennis analyst and former professional Patrick McEnroe told reporters on a call on Wednesday.
"He's moving as beautifully as ever. He's hitting the ball brilliantly. Wins four or five matches at the Hopman Cup against high-level competition. To me, he's the clear favourite."
Bookmakers are also expecting the world number two to successfully defend his title.
Federer ($2.75 AUD) is the favourite to win the tournament, according to Australian Gambling, with world number one and last year's Australian Open runner-up Nadal ($5.50) trailing him.
"He could always get picked off early," McEnroe said.
"But based on what I've seen so far... I don't think there's anybody else that you could say is a favourite other than Roger at the moment."
ESPN analyst and former world number one Chris Evert said his experience and smooth style of play, which has left him relatively injury-free, set him apart from the field.
"This is a guy who is so relaxed... I think that affects him mentally as well as physically," she said.
"Mentally and emotionally, having kids, having a family, he gets away from the game. He knows how to compartmentalise really well."
"He lets the losses roll off his back, there's no tension there. I think he has a real joy for the game," she said.
"That's what makes Federer, Federer."
The Australian Open runs from Jan. 15-28.
(Reporting by Rory Carroll, editing by Ed Osmond)
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