Saka, who has played in each of Arsenal's last 87 league games, a club record streak for consecutive matches in the competition, could still continue that run.
"Well he is in contention. Let's see how he progresses from here to Sunday," Arteta told reporters.
"He had to leave the pitch, that's never good news but let's see how he recovers."
Saka was named in England's squad on Thursday for the friendly with Australia and Euro 2024 qualifier with Italy, and Arteta has been in contact with England manager Gareth Southgate.
"I have spoken to Gareth on several occasions. I have to do my job and give him the news," Arteta said.
"He needs to make the best decision for the national team. I'm not going to get involved there."
The Arsenal manager also gave an update on midfielder Thomas Partey who had missed the last six games with a groin injury but was on the bench for the defeat at Lens.
"Well, he's ahead of schedule that's for sure. We wanted to have him in the squad if we needed him, the way the game panned out we had other necessities and we didn't use him," Arteta said.
"He will be in the squad for Sunday."
Arsenal were City's main rivals for the league title last season, but having topped the table for several months they were eventually overtaken by Pep Guardiola's treble-winning side.
At the start of this campaign, Arsenal did beat City to win the Community Shield, something which Arteta believes will serve them well for Sunday's game.
"Well, that was an important one for us. To win a title against Manchester City is always something you have to value," he added.
"The way we did it as well and it gives us confidence and belief that we can beat them."
Arsenal are third in the standings, one point behind leaders City after making an unbeaten start to the season. City lost their most recent league game 2-1 at Wolverhampton Wanderers.
