It is actually quite possible for Arsenal to steal one point from Manchester City. I'm saying this even though I know the match is at Etihad. You would remember the Chelsea match Manchester City played a month ago. I don't think so many people expected Manchester City to lose points to a Chelsea that were having really tough days.
Arsenal have been in a really wonderful form for nearly 10 weeks.

This should be enough for the fans to keep their hopes up at Etihad. I hope Arsenal manage to get at least one point there.
Arsenal has performed very well in the last few matches. Even though they had difficulties against Porto, in the end they were the ones who qualified for the next round. Arsenal is the most aggressive team in the PL this season. They have scored 70 goals. Arsenal is very strong in the English league and this will be a big challenge for City. The bookie favors City but I bet the match will end in a draw. Both teams are in contention for the championship title. So I think both teams will try to play carefully and minimize mistakes. I really can't wait to watch that game.
I really don't see why the bookies have decided to favour City in this game,but I see a 50-50 game,infact if we are to look at the favourite,we would say it's Arsenal because they've been able to win City twice this season, although I know this one is going to be very tough because City are at home,and would want to do everything possible to revenge what Arsenal did to them in the previous match, Meanwhile,Arsenal boys knows that if they are to have trophy at the end of the season,they must be able to beat City,and that would give them the motivation they would use in Winning other teams and be able to lift the trophy.
It's obvious that if you were missing one important factor that made bookies put city as favorable team to win the game against arsenal soon. A home game, and yeah city has very good record at home game this season.
This simple chart obviously answered your question regarding why bookies put city as favorite club in the upcoming game.

City never lost at home games and this is the main reason why city is being favored to get three points in the upcoming games against arsenal.