* Dollar recovers after Tuesday's drop on impeachment
inquiry
* Aussie, offshore yuan hurt by latest trade concerns
* New Zealand dollar gains as central bank gives little away
* Graphic: World FX rates in 2019: http://tmsnrt.rs/2egbfVh
(Adds details, new quote)
By Tommy Wilkes
LONDON, Sept 25 (Reuters) - The dollar recovered on
Wednesday after being hit a day earlier by the launch of a
formal impeachment inquiry against U.S. President Donald Trump
while renewed global trade tensions weighed on the Chinese yuan
and Australian dollar.
The U.S. currency dropped on Tuesday after the announcement
that the House of Representatives would initiate a formal
impeachment inquiry and disappointing consumer confidence data
also weighed on the greenback. But the world's most liquid currency rebounded on Wednesday.
Adam Cole, a currency analyst at RBC Capital Markets, said
the immediate reaction to sell the dollar was questionable.
"For a couple of reasons it's not a sell risk or sell dollar
story," he said, pointing to the very small chance that Trump
would be impeached, and his view that if the president left
office it would not necessarily be positive for risky assets.
Some market players, however, said more domestic instability
would consume Trump's political capital, making it harder for
him to compromise with China on trade or boost spending ahead of
a presidential election next year.
"Increasing U.S. political uncertainty may dampen the
outlook further, as it reduces the already low probability of
the U.S. economy benefitting from a pre-election fiscal
impulse," Morgan Stanley analysts said in a note.
The dollar index climbed 0.2% to 98.545 .DXY . Against the
euro, it rose 0.2% to $1.0999 EUR=EBS .
TRADE RHETORIC
Forex markets elsewhere were largely in a risk-off mood.
Trump's rhetoric on China turned harsh on Tuesday as he
criticised Beijing's trade practices during a speech at the
United Nations General Assembly. Chinese Foreign Minister Wang Yi said Beijing would not be
threatened on trade or allow interference in its
affairs. China's offshore yuan fell 0.2% to 7.1240 CNH=EBS . The
China-exposed Australian dollar weakened 0.3% to $0.6779
AUD=D3 .
Emerging market currencies mostly fell.
But the New Zealand dollar bucked the trend after its
central bank gave a less dovish monetary policy outlook than
expected. The Kiwi was last 0.1% higher at $0.6319 NZD=D3 .
The yen dropped 0.2% against the dollar to 107.28 yen
JPY=EBS . Another safe-haven, the Swiss franc, edged up 0.2%
against the euro to 1.0845 francs EURCHF=EBS .
Sterling dropped 0.5% to $1.2440 GBP=D3 , reversing most of
its gains from Tuesday when Britain's Supreme Court ruled Prime
Minister Boris Johnson had unlawfully suspended parliament.
Euro vs U.S. dollar https://tmsnrt.rs/2mAPAvJ
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(Editing by Larry King and David Clarke)