The Swiss world number two is in sparkling form for his home tournament, clinching the Shanghai Masters in October - his 23rd title at ATP 1000 level.
Federer - a five-time champion - will also be buoyed by the absence of Argentine Juan Martin del Potro, who has beaten the 17-time major winner in the past two Basle finals.
Nadal - who slipped to three in the rankings after Federer's win in China - is just battling to get out onto court as he tries to get past a bout of appendicitis.
The Spanish left-hander was ousted by countryman Feliciano Lopez in his first match in Shanghai, and has conceded his spot at the season-ending Finals in London is in severe doubt.
Whether Nadal participates in the eight-strong field depends on how he fares in Basle.
Stan Wawrinka will play a tour match on home soil for the first time since being crowned a major champion.
Wawrinka, the world number four, claimed the Australian Open in January but his only competitive appearances in his homeland since have been Davis Cup rubbers.
Canada's Milos Raonic and Bulgarian Grigor Dimitrov will be keen to go deep in Switzerland, with a prospective spot at the Finals on the line for them.
Raonic is set to fall out of the top eight in the race to London, after his early exit at the Kremlin Cup in Moscow combined with David Ferrer's run at the Eerste Bank Open in Vienna.
Dimitrov was 11th in the standings prior to his strong performance at the Stockholm Open, and is poised to threaten for a spot in the final eight.
Dimitrov's prospects of qualifying for London have also significantly improved of late, given the doubt surrounding Nadal's fitness.
The only other top-20 player involved in Basle will be Latvia's Ernests Gulbis.
Other notables in the draw include big-serving and in-form Croatian Ivo Karlovic, and Australian maverick Nick Kyrgios.