* Dollar recovers after Tuesday's drop on impeachment
inquiry
* Aussie, offshore yuan hurt by latest trade concerns
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Sept 25 (Reuters) - The dollar recovered on
Wednesday after falling when a formal impeachment inquiry began
against U.S. President Donald Trump, while the latest Sino-U.S.
trade row hurt currencies correlated with global growth.
The dollar dropped on Tuesday after House Speaker Nancy
Pelosi announced the House of Representatives would initiate a
formal inquiry, saying Trump appeared to have undermined
national security and violated the U.S. Constitution.
The dollar recovered in early European trading, although
analysts said the impeachment inquiry would increase pressure on
the U.S. currency, which has been among the best performers in
recent years.
It is uncertain whether the inquiry will lead to
impeachment, much less to conviction, which needs a two-thirds
majority in the Republican-controlled Senate. But the political
uncertainty is considered negative for the dollar.
Some market players also think domestic conflict will
consume Trump's political capital, making it harder for him to
compromise with China on trade and other issues.
"Heightened political uncertainty in the run-up to the
election could further undermine the outlook for business
investment and growth in the US, and pose some downside risks
for the US dollar in the year ahead," MUFG analysts said.
The dollar index was last up 0.2% at 98.545 .DXY . Against
the euro, it rose 0.2% to $1.0996 EUR=EBS .
Forex markets elsewhere were mostly in a risk-off mood, with
the Australian dollar, sterling and most emerging-market
currencies lower.
On Tuesday, Trump's rhetoric on China turned harsh as he
criticised Beijing's trade practices at the United Nations
General Assembly, saying he would not accept a "bad deal" in
U.S.-China trade negotiations. Chinese Foreign Minister Wang Yi retorted that Beijing would
not be threatened on trade or allow interference in its affairs,
including Hong Kong, and had no intention to "play the `Game of
Thrones' on the world stage". "Trump's speech was full of sensitive words for China -
trade practices, currencies, freedom of religion and so on. It
is not hard to imagine it will irritate China," said Daisuke
Uno, chief strategist at Sumitomo Mitsui Bank.
"In the past China has reacted to U.S. pressure on trade by
bringing down the yuan. It appears we are having that settings
again," he said.
China's offshore yuan fell 0.2% to 7.1205 CNH=EBS . China-
exposed Australian dollar weakened 0.3% to $0.6780 AUD=D3 .
The yen dropped 0.2% against the dollar to 107.31 yen
JPY=EBS . Another safe-haven, the Swiss franc, edged up 0.2%
against the euro to 1.0845 francs EURCHF=EBS .
Sterling dropped 0.4% to $1.2445 GBP=D3 , reversing most of
its gains from Tuesday, when Britain's Supreme Court ruled Prime
Minister Boris Johnson had unlawfully suspended parliament.