Spain, who lost to Novak Djokovic's Serbia in the final of the inaugural ATP Cup previous year, will face Greece on Thursday and Nadal would hope he would be fit to play the tie and get some match practice before the Feb 8-21 Australian Open.
The 20-time Grand Slam champion was due to take the court against Australia's top-ranked player Alex De Minaur, but opted to rest instead as he prepares for the Australian Open next week.
"The exclamation point on the best point I've seen in the ATP Cup so far".
Last week, in an exhibition in Adelaide following a 14-day hotel quarantine - part of the Covid-19 pandemic regulations for everyone traveling to Australia - Djokovic spoke about feeding off the energy of the crowds.
This means that Spain, last year's finalist, will have to go through Greece and Australia if they want another shot at the ATP Cup trophy.
The tournament starts today and ends on February 6. The Spaniard has withdrawn from the clash citing a "stiff lower back".
"We appreciate so much the effort that the country and Tennis Australia have done to allow us to be here and play our sport".
The Australian took time to get his groove back against 209th-ranked Frenchman Alexandre Muller, losing the first set, then needing left knee treatment before knuckling down to win 3-6, 6-4, 7-6 (7-4) in the Murray River Open.
It will be Federer's first match since he was knocked out of the quarter-final stage of last year's Australian Open.