The Argentinian midfielder was in talks with Barcelona last summer and some believe that he agreed terms on a move to the Nou Camp at the end of this season.
But the Liverpool boss is confident that talks are going well and a contract extension will be signed soon.
"I was talking with him and his agent the other day and it is true Javier is happier," said Benitez.
"The conversations were very positive. When you talk with Javier he is very settled and happy.
"Everyone knew about some clubs but talking with us he was fine."