The first quarter of 2023 saw a temporary pause in the bull run of the US dollar (USD), as the currency reversed sharply in Q4 of the previous year. This reversal was driven by the pricing in of Federal Reserve rate hikes and improved global economic conditions. Looking ahead, it is likely that the Fed will continue to tighten monetary policy, albeit at a slower pace than in previous quarters. The Federal Reserve's focus on lowering inflation to its target 2% rate has been a key driver of its decision-making, and ongoing increases to the fed funds rate are anticipated in the near term. Despite this, the Fed's approach is expected to be less aggressive than in the past, reflecting a more cautious and deliberate strategy. In the corporate credit market, spreads tightened in Q4 2022, indicating a reduced risk perception among investors. This was accompanied by indications that the pace of Fed policy tightening would slow, along with signs of improving economic conditions globally. Looking ahead, it is important for investors to monitor the Federal Reserve's actions and communications closely, as they will continue to be a key driver of market sentiment and volatility. Additionally, ongoing developments in the global economy, particularly in relation to inflation and monetary policy, will likely have significant implications for asset prices and investment strategies. In summary, the first quarter of 2023 saw a temporary pause in the USD bull run, driven by a reversal in Fed policy and improved global economic conditions. While the Fed remains committed to lowering inflation and tightening monetary policy, the pace of these actions is expected to be less aggressive in the near term. These developments have had significant implications for corporate credit markets and investor risk perception, and will continue to be important factors to monitor in the coming months.