Federer had a career resurgence in 2017 which all began in Melbourne as he won his first Grand Slam since 2012 when he emerged victorious at the Australian Open following a five-set thriller with Nadal.
The 36-year-old would continue to defy logic and age as he won another six titles, including a record-breaking eighth Wimbledon crown. He was not able to end his year as the world number one, however, with Nadal clinching the year-end top spot.
Despite the Spaniard's return to the top for the first time since 2013, it is Federer who is seen as the favourite for the first Grand Slam of the year, especially after his dominating performances at the Hopman Cup earlier this month where he helped Switzerland win the event.
"He looks younger than ever," McEnroe, brother of John, was quoted as saying by Reuters. "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.
"He could always get picked off early. 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."
Meanwhile, both Federer and Nadal have learned who their first opponents are. The Swiss ace will begin his title defence against Aljaz Bedene while Nadal will face the Dominican Republic's Victor Estrella Burgos.
Novak Djokovic will face America's Donald Young as the 12-time Grand Slam winner has been drawn on the same side of the draw as Federer.
The duo could meet in the semi-final stage, having not played each other since the semi-final of the 2016 Australian Open where the Serbian emerged victorious.
The 2018 Australian Open will commence from 15-28 January.