You will want to go ahead and use the leather needle and a rather long stitch length. If you look at commercial leather goods, this is most likely what you will find. For hand stitching my husband and son use the waxed thread available from Tandy/Leather Factory. At this time they have not done any stitching of leather on a machine as they mostly use the heavier weight leathers for their projects. Since you are using a lighter weight leather, I would think you could use upholstery thread very successfully on your machine. Let us see pictures of your pouch when done!