FOREX-Euro in 5-week trough; commodity currencies at multi-year lows
(Updates prices, adds euro and Bund milestones)
* Euro drops below $1.10, dollar index at one-month high
* Lower German Bund yields pull down euro
* Commodity currencies sold off
By Anirban Nag
LONDON, July 7 (Reuters) - The euro fell 1 percent against a buoyant U.S. dollar on Tuesday, as German 10-year Bund yields fell to their lowest since early June and interest rate differentials moved against the shared currency.
The drop in Bund yields and the euro came after the European Central Bank left emergency liquidity for Greek banks at current levels but increased the haircuts on the collateral it demands. That kept alive fears Greek banks will soon run out of cash and that Greece's problems will spread to other southern European countries.
Traders said the next 24 hours could be crucial. Euro-area leaders and finance ministers are meeting in Brussels to discuss Greece and a lack of progress could put pressure on the euro.
European Commission President Jean-Claude Juncker told the European Parliament on Tuesday Greece's government must come forward with proposals to resolve its debt crisis. He said he still opposed calls for Greece to exit the euro. Continued...