What do you do in a situation when your in-laws are evil toward your child because they don't like you? They take it out on her -- nice one minute and evil demonic the next -- even using profanity and bodily harm against you, and all you say is "I'll pray for you."
There is no reason you need to keep evil people in your child's life. Since they are your wife's parents, you have responsibility to see that they are cared for in their old age, but you don't have to have them in your home or involved with your children.
If they ask, simply state that they have not been behaving properly in front of your children and you don't want your children exposed to that.